A Chaotic Election Period Looms for ALL Markets. Here’s How to Navigate It as an Investor ...

It’s college crunch time for my oldest daughter. Filling out applications. Visiting campuses. Taking standardized tests. Deciding which schools make her final cut. It’s hard for me to believe sometimes, but yes, she IS a high school senior who will be leaving the “nest” before long.

I went through the same thing when I was 18, of course. But there’s one key difference between Maya and me: Our primary interests. I wanted to major in English and journalism. She is very, VERY interested in politics and government.

And for the next several weeks, Wall Street will be laser-focused on the same thing!

Why? This week marked the start of the debate process, with President Donald Trump and Democratic nominee Joe Biden going toe-to-toe in Cleveland last night.

Source: theprint.in

Polls have shown the race tightening in some states. And Election Day is only five weeks away.

Investors, analysts and economists know they need to figure out what direction the country will likely be headed after Nov. 3. But this election promises to be one of the most volatile and contentious EVER!

For starters, there’s no guarantee we’ll even know who won the election the morning after voting ends. Or if the loser and his supporters will accept the purported results if so.

Trump has repeatedly challenged the legitimacy of mail-in voting, which will be more important and widespread than ever due to COVID-19.

And he is trying to push through an eleventh-hour Supreme Court nomination because the election could be decided there. Both campaigns are also ramping up their legal teams and prepping for a long, drawn-out challenge process in several states.

Traditional economic issues like tax policy or infrastructure spending have mostly taken a back seat ad social issues like racial justice and policing practices dominate the news cycle and electorate mindshare. So is the coronavirus pandemic as new stimulus proposals continue to languish in Congress.

These social issues are incredibly important for the nation as a whole, of course. But purely from an investor and markets standpoint, their impacts are hard to measure, quantify or analyze.

Wall Street is mostly flying blind.

That’s unlike the election in 2016 when tax and spending policies were key platform issues for both candidates. For instance, it was clear that a Trump election would benefit financial stocks due to reduced regulation and government contractors because of higher defense spending.

Bottom line? We’re entering a period of potentially enormous market volatility. Investors have already gotten a taste of it, what with the Dow plunging a couple thousand points in a few weeks, then gaining back roughly a thousand of those points in a few days. But what comes next could easily be much worse.

My advice? Continue to use a “Safe Money” investing strategy: Keep more cash on hand. Allocate more money to “chaos insurance” assets like gold, silver, mining shares and Treasuries. Stay focused on defensive, higher-rated stocks with bountiful dividends.

That should work best this fall. And if I’m right about where we’re headed in 2021, it’ll continue to work best then, too!

Until next time,

Mike Larson