There is only one day left until the official election in the United States: On Tuesday (5th) Eastern Time, American voters will elect their next president, which may determine the direction of the US economy for the next four years.
Wall Street has been discussing this matter extensively, constantly checking the latest polls and trends in the election betting market to predict whether former President Trump or Vice President Harris will ultimately win and take over the White House, and repeatedly weighing what this means for their positions.
However, on the surface, there is a lot of noise and Wall Street seems to be very concerned about this election, but in reality, the big shots are still very rational. They did not invest much money in the US stock market, but chose to hold cash.
Professionals are well aware that predicting a winner before it appears will bring unexpected wealth. But the problem is that the election is still evenly contested so far, which makes it difficult for many people to bear the risk of failure.
Eric Diton, President and Managing Director of Wealth Alliance, an investment consulting firm, said in an interview, "We are not preparing for the outcome of the election because it is a coin toss decision. Making bets is meaningless
Most traders expect significant volatility this week. Dave Lutz, a stock sales trader and macro strategist at JonesTrading, said, "It's impossible to see who will win
Cash is safer
Following the election, there may be other catalysts that could also affect market trends. On Thursday after election day, the Federal Reserve will soon make a decision on interest rates, and Chairman Powell will also hold a press conference where he will provide a detailed introduction to the Fed's interest rate path. In addition, a large number of US companies' financial reports will also be released one after another, and chip giant Nvidia is expected to announce its financial report on November 20th.
In view of this, Lutz suggests "holding some cash" in order to allocate when any short-term opportunity arises, such as when a winner appears, individual stocks or sectors will instinctively react.
I would like to say that many investors are currently thinking this way, "he added.
Robert Schein, Chief Investment Officer of Blanke Schein Wealth Management, stated that prior to the election, he increased his cash equivalents holdings from the usual 5% to 10%. His strategy is to prepare cash before making large purchases of assets when the outcome inevitably triggers at least some market volatility.
Investors need to see through the lingering election risks, "Anwiti Bahuguna, Chief Investment Officer of Global Asset Allocation at Northern Trust Asset Management, said in an interview." Due to strong speculation, traders are now unable to even build positions, and they do not know which policy proposals of the two candidates will be passed in Congress
Ignore election noise
Insiders within the company are also unwilling to get involved in the stock market. Data shows that only 261 corporate executives purchased stocks of their own companies in October, the lowest level since at least 2017, pushing the buy sell ratio to the second lowest level since spring 2021.
Some Wall Street professionals suggest that investors seeking safer stock investments should ignore election noise.
Bahuguna said, "Elections are not always there. Although we expect a period of turbulence next month, what ultimately supports the stock market are decent corporate profits, strong economic growth, falling inflation, and the Federal Reserve's interest rate cuts
Brian Mulberry, a client portfolio manager at Zacks Investment Management, said, "Interest rates are still in a restricted state, and there is a greater possibility of increased volatility before the end of the year, so it is appropriate to adopt a more conservative approach
The key to all of this is that Wall Street currently believes that the safest course of action for investors in an election without a clear winner is to wait patiently.
Mark Luscini, Chief Investment Strategist at Janney Montgomery Scott, said, "In such a challenging situation, it's best to look to the future and continue thinking about the macroeconomic situation 6 to 18 months from now, rather than just focusing on the results of that day