STREET DOGS
Beware of US election fever
Whatever the outcome of the US elections, there’s no reason to panic, writes Michel Pireu
Oliver Renick at Bloomberg says not to worry if the market gets a little weird after the US elections. "In the hours after the president is elected, equity investors need to brace for volatility," he warns. "What they shouldn’t do is panic. That’s because regardless of how prices react on November 9, next-day moves in the S&P 500 index are useless in telling what comes after. While the index swings an average 1.5% the day after the vote, gains or losses over the first 24 hours predict the market’s direction 12 months later less than half the time. "The compulsion to act in the vote’s aftermath is often very strong — stocks swing twice as violently as normal those days, data compiled by Bloomberg show. They plummeted 5% just after Barack Obama beat John McCain in 2008. But while nothing says Wednesday’s reaction won’t be a harbinger for the year, nothing says it will either, and investors should think before doing anything." David Sadkin, senior vice-president at Bel Air Investment A...
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