Schaeffer’s Investment Research Review experts recently discussed what the election will mean for the stock market.
Former Vice President Joe Biden is now the president-elect, and it’s important to know what that means for the stock market. The investment experts at Schaeffer’s Investment Research Review understand that elections have major impacts on the market, and they recently discussed what may happen due to the most recent presidential election in early November.
The Schaeffer’s Investment Research Review team stated that, in addition to this election, the stock market and economy as a whole are still dealing with the risks of the COVID-19 pandemic. The Federal Reserve has recently resolved to keep interest rates low for the near future. Schaeffer’s Investment Research Review investment experts stated that put buyers on the CBOE Market Volatility Index were making historic bets on the volatility of the market declining in the coming days, weeks, and months. These bets resulted in a multi-year high regarding bets that are high in volatility.
“These investors making historic bets on volatility were banking on the pre-election spike in volatility,” Schaeffer’s Investment Research Review experts said. “They believe that volatility will subside soon, but these bets could result in some losing entire investments if the volatility remains near its current level.”
The Schaeffer’s Investment Research Review team stated that those who buy VIX futures are generally correct about the direction volatility will take (up or down), but this doesn’t necessarily mean they’re always able to profit from those bets. They stated that VIX futures options buying went drastically higher in October in anticipation of the volatility of the market declining after election day. Schaeffer’s Investment Research Review experts stated that the only problem with this method this election cycle is that many were unsure how long it would take to declare an official president-elect.
“Put buyers with a VIX expiration in November will have the expiration take place early on Nov. 18,” Schaeffer’s Investment Research Review experts said. “That doesn’t allow much time after the election results for volatility to drop.”
The Schaeffer’s Investment Research Review team stated that lawsuits attempted by President Trump’s team held market volatility on a bit longer. They stated that a clear victory is critical in reducing uncertainty, and ultimately, reducing market volatility.
Schaeffer’s Investment Research Review experts added that the U.S. currency remains down 2 percent compared to last year at this time. They see the dollar bearing on a weaker path, despite Joe Biden being the president-elect. This is due to the fundamentals of interest rates and other factors, including COVID-19, which are not working in favor of the U.S. dollar.
“We’ll soon see what a new president does to lead the U.S. economy,” Schaeffer’s Investment Research Review experts said. “Until then, we expect the market to remain volatile due to a divided political climate and the recent spike in U.S. coronavirus cases.”