Monday, November 07, 2016

Another Brexit-like event?

The US presidential election is only a day away, on November 8th, and it will have serious financial consequences in addition to political ones. Not only to the US but to the rest of the world as well.

The Wall Street crowd is expecting Hillary Clinton to win, and stocks have rallied today signalling that the odds of her presidency might have improved after she had again been cleared by the FBI of any wrongdoing in an e-mail scandal, the investigation into which has been going on for many months now.

But the race is very tight, so her win may turn out to be totally illusory leading to a Brexit-like crash in the stock markets across the globe after the election night, just as was the case after the Brexit referendum (see the tweet below).
I don't think this will be the case.

I expect Hillary Clinton to win and the markets to rally, but I could be wrong just like anyone else. In fact, like many, I was expecting the Remain side to win the UK referendum on staying or leaving the EU, because I honestly did not see the point in leaving.

And I still don't. While many try to rationalize this, I think it's pointless because the irrational behavior cannot be rationalized. Voters can be as irrational as traders or investors often are.  Reason is highly underutilized by most members of our species.

Hillary Clinton is a flawed candidate, as I said on this blog not long ago. In some ways perhaps even more than Donald Trump. But she is also more predictable, more mature, and so more acceptable to investors because if there is one thing that markets don't like it is uncertainty which can be a drag on business and economy.

Still, if you are a trader you can make money trading such events. Especially using tools like KING that are well suited for more volatile trading environments.