Could the Mid-Term Elections Cause You to Lose Money?

Could the Mid-Term
Elections Cause You to
Lose Money?
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/stock-investing-tips/could-the-mid-term-elections-cause-you-to-lose-money
In just a couple of months the country
will vote in the mid-term elections.

This is the election that falls between
presidential elections.

On the Federal level, all seats in the
US House of Representatives are up
for election every two years and a third
of US senate seats as well.

There is a tendency for the party that did
well in the presidential election to lose seats
in this “off year” election.

Because of the potential for a
significant shift in political power on the
Federal level, investors are wise to pay
attention.

Could the mid-term elections cause you to
lose money? Here are some thoughts on
the subject.

The Effect of Mid-Term
Elections on Stocks

Zacks Investment Management has
some useful things to say about how
mid-term elections affect stocks.

Because midterm election years can
mean a shift in the balance of power in
Congress, it also means that there is
an increased risk of one party enacting
new laws and/or policies in the lead-up
or once the power dynamic is set.

Markets, in our view, do not like policy
uncertainty.

This thought is supported by the figures
they quote.

Going back to 1962, the average
correction during a midterm election
year was an eyebrow raising -19%.

AND
Since 1962, the average bounce for
stocks following the midterm correction
was a sturdy +31%.

Their approach to politics is that they
are only interested to the extent that
what the government does has an
effect on investing by way of “property
rights, corporate profits, and economic
growth.”

If you believe these folks, you could
lose money going into the mid-term
election and win even more back
afterwards.

Many Factors Affect Your
Investments

How well your investments do depends
on how well you pick them.

We have repeatedly mentioned the concept
of intrinsic value to use as a guide for long
term investing in stocks, although the
concept applies to any investment.

In order to accurately determine
intrinsic value of an investment, you
need to be able to predict the future.

That works better with a stable economy, no
extreme changes in the laws affecting
investments, and no major crisis that throws
everything into an uproar.

Volatility in any factor makes investors
nervous and tends to drive down stock
prices.

This is why the market tends to sag in the
months coming up to the mid-term
elections.

How about This Year?

Could the mid-term elections cause
you to lose money this year more so
than in other mid-term election years?

The factors that concern us all revolve
around the investigation into Russian
meddling in the 2016 presidential election.

And, could things get worse instead of
better after the election?

The main cause of low stock prices
going into the mid-terms is uncertainty.

And, when the election is past, the
uncertainty goes away.

Thus, stock prices fall and then they
rise.

But, what happens this year if the
Democrats reclaim both the US House of
Representatives and the US Senate?

And, what happens if the investigation
into Russian meddling in US elections
finally implicates the sitting US
President?

Clinton was impeached in the 1990s when
the Republicans controlled the House of
Representatives but the Democrats
controlled the US Senate and Clinton
remained in office.

Nixon was likely be impeached by the
House and convicted by the US Senate
and agreed to resign.

Our take on Donald Trump is that he
would never give up even if there were
damming evidence of his complicity in
Russian meddling or in orchestrating a
cover up.

The worst near-term case scenario for
investors is that the Democrats take back
the House and Senate.

Then the House votes to impeach
Donald Trump.

The national anguish from such a drama
played out on the talk show and news,
repeated presidential tweets, and a high
stakes game of chicken between the
President and Congress would continue the
uncertainty that investors hate and drive
stocks down even further.

Pay attention as this drama plays out
and maybe consider looking at our
article about how to invest without
losing any money.

For investors who like certainty, the
potential upside to the worst case scenario
is that Trump leaves office, the Tweet
storms cease, we have a “ho hum”
president in Pence, and four years of
relative tranquility in Washington allow
investors to plan, invest, and make profits.

Could the Mid-Term Elections Cause You to Lose Money?

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Could the Mid-Term Elections Cause You to Lose Money?