Traders watch US President Donald Trump give a coronavirus briefing, at the New York Stock Exchange in New York, the US. Picture: REUTERS/LUCAS JACKSON
US elections traditionally spark a forecast frenzy on how the outcome will affect the stock market. There was broad agreement this year that Joe Biden would get too distracted by the important issues of the day to nurture the S&P. He would raise corporate taxes, rein in big tech and big pharma, and refocus on environmental issues and renewable energy, both at the expense of oil.
The reality is that, in a variation of the ‘buy on the rumour, sell on the fact’ trading adage, the market is rigged against private investors The reality is that, in a variation of the “buy on the rumour, sell on the fact” trading adage, the market is rigged against private investors. Forecasts about the outcome of specific events are always likely to be wrong because they are already discounted. Rather than improve investor returns, they just encourage harmful behaviour, such as market timing and straying from a mapped-out path.