The investment markets are volatile on a constant basis. When a new president is elected in the United States, a lot of speculation tends to start which most certainly does not help ease the speculation that is being done. When Donald Trump won the elections back in 2016, huge speculations started about both the stalk and crypto markets and many traders assumed the markets would hit a historical low, but as time has shown that was not the case.
For some reason, every time when a new president is elected, no matter what party he represents, Republican or Democrats, speculations start that the financial markets will hit a new all time low.
This has happened under every new president that was elected and the main reason people start to speculate about how the markets will react to a new president is to simply cause chaos, and have stock prices go down.
Now why is that good or bad? It really isn’t, it simply gives some traders the chance to buy certain stocks at a lower price, and keep in mind, it is not guaranteed that the price of a certain stock may go down due to these so called “presidential speculation”.
When stock prices go down, that’s the best time to start buying. Initially, this thought was first heard from Warren Buffet, but as years go by you start hearing it from more and more traders, and without a doubt, the saying is actually true.
Hundreds of thousands of traders usually wait for market drops that tend to occur a couple of times each year, and during the market drops that is when they buy certain stocks. So for example, imagine a certain stock costs $100 a share, and when the so called “presidential speculation” starts in the US when a new president is elected, the stock price drops from $100 to $75. That is a 25% decrease in the value of the stock.
Now imagine, you buy a total of 133 shares of that stock during that market drop, and during the market drop 133 shares of that stock at the price of $75 per stock is a total investment of $10,000. After your purchase, a few weeks pass by, the new president is sworn into office and the market stabilizes and stock prices return to their usual marks.
That stock you bought a little under a month ago is now back at its normal price of $100 per stock, and your $10,000 worth of stocks are now worth $13,300. That’s a 33% ROI in less than a month. Now imagine doing so with not $10,000, but $50,000 or how the big traders trade- millions of dollars! That’s exactly how big traders make their money, on market speculations, and one of the most popular speculations is without a doubt the so called “presidential speculation”.
When Biden won the 2020 US presidential elections, the market didn’t drop. On the contrary, most stock prices went up! This is a unique phenomenon that rarely ever happens, and this can be explained only due to the fact that his opponent was Trump.
With Trump in the White House, the market was fairly stable, but the last weeks of his presidency were extremely controversial which essentially led to his downfall as the US president. When Biden was elected president, instead of the markets reacting like they usually do, they actually went up. Stock prices were skyrocketing!
With the election of Biden we can firmly say that there was no so called “presidential speculation” and Biden’s victory played a positive stable role on the financial markets.
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