The U.S. midterms are entering the final countdown. Has the window for trading U.S. stocks around the election already opened?
The U.S. midterm elections are happening today. During my livestreams over the past couple of days, people have been asking whether they should make a bet on U.S. stocks based on the election results, or $BTC …
My answer: Don’t treat the election as a trading signal. This is much more likely to be a “noise window” than a “free money window.”
Why’s that?
I looked through the data, and a few things struck me as pretty counterintuitive. People may feel that stock markets are more volatile in midterm election years, but JPMorgan analyzed data going back several decades and found that the average return in midterm election years was actually 9.2%. That’s certainly lower than the 13.3% in non-election years, and volatility is higher, too.
But the key point is that the election itself isn’t what causes the volatility.
For example, stocks fell in 2022, a midterm election year, because the Fed hiked rates aggressively. They fell in 2002 because of the aftereffects of the dot-com bubble.
Blaming the election is just getting the cause and effect wrong 😂
Now, let’s look at the market. The baseline expectation is that Democrats will win the House while Republicans hold on to the Senate—in other words, a “divided government.” Some analysts have made the point directly: if that’s what happens, hardly anyone will trade on the result, because it’s already priced in. What might actually be worth trading is a low-probability outcome like “Republicans unexpectedly hold on to both chambers”—but betting on that is basically like flipping a coin 😂
And don’t forget, there’s a much bigger issue hanging over the market. The Fed held steady in October, but there are plenty of hawkish voices within the committee. The president of the Dallas Fed even said rates may need to be raised at least twice more. While you’re placing trades based on the election results, institutions are watching the odds of a December rate hike (currently priced by the market at around 85%).
So…
For crypto and U.S. stocks, the election outcome is, at most, a short-term emotional “pulse” from the removal of uncertainty. If you already have positions, holding on is a better bet than trying to call the direction. If you’re out of the market and want to get in, consider waiting for the results and for volatility to come down before looking for an entry point. You’ll have better odds than by placing your bet now.
Folks, let’s not let our political enthusiasm affect our positions.
After all, elections are elections, and trading is trading~
What do you think? Drop a comment below 🥳
#美国中期选举倒计时，美股博弈窗口已开启？
The U.S. midterm elections are happening today. During my livestreams over the past couple of days, people have been asking whether they should make a bet on U.S. stocks based on the election results, or $BTC …
My answer: Don’t treat the election as a trading signal. This is much more likely to be a “noise window” than a “free money window.”
Why’s that?
I looked through the data, and a few things struck me as pretty counterintuitive. People may feel that stock markets are more volatile in midterm election years, but JPMorgan analyzed data going back several decades and found that the average return in midterm election years was actually 9.2%. That’s certainly lower than the 13.3% in non-election years, and volatility is higher, too.
But the key point is that the election itself isn’t what causes the volatility.
For example, stocks fell in 2022, a midterm election year, because the Fed hiked rates aggressively. They fell in 2002 because of the aftereffects of the dot-com bubble.
Blaming the election is just getting the cause and effect wrong 😂
Now, let’s look at the market. The baseline expectation is that Democrats will win the House while Republicans hold on to the Senate—in other words, a “divided government.” Some analysts have made the point directly: if that’s what happens, hardly anyone will trade on the result, because it’s already priced in. What might actually be worth trading is a low-probability outcome like “Republicans unexpectedly hold on to both chambers”—but betting on that is basically like flipping a coin 😂
And don’t forget, there’s a much bigger issue hanging over the market. The Fed held steady in October, but there are plenty of hawkish voices within the committee. The president of the Dallas Fed even said rates may need to be raised at least twice more. While you’re placing trades based on the election results, institutions are watching the odds of a December rate hike (currently priced by the market at around 85%).
So…
For crypto and U.S. stocks, the election outcome is, at most, a short-term emotional “pulse” from the removal of uncertainty. If you already have positions, holding on is a better bet than trying to call the direction. If you’re out of the market and want to get in, consider waiting for the results and for volatility to come down before looking for an entry point. You’ll have better odds than by placing your bet now.
Folks, let’s not let our political enthusiasm affect our positions.
After all, elections are elections, and trading is trading~
What do you think? Drop a comment below 🥳
#美国中期选举倒计时，美股博弈窗口已开启？
