COLUMN: Ask the money lady – U.S. election and markets

Dear Money Lady, The stock market is so crazy right now and I am afraid to keep investing in it. Should I wait until after the U.S. Election or maybe next year. What do you think?

James

Dear James,

I understand your apprehension, however you must remember that we have seen the markets do this many times in the past. It is important to remember that what goes down, always comes right back up when you are looking at the stock market throughout history. The U.S. presidential election will have an effect on the market depending on the candidate that wins. If Harris wins – things will likely stay the same; however, if Trump wins, Canada could experience new tariffs on imports. Many economists are uncertain on how another Trump administration could play out for Canada. We surmise that with Trump’s tariff proposals, it most likely will trigger a global trade war in 2025.

But, what does that mean….what is a trade war?

A trade war is a “tit for tat” spat between nations. When the U.S. imposes tariffs on other countries, the other countries respond by putting high tariffs on their own exports. The problem arises because – tariffs are quite easy to impose, but then once executed, they are much harder to remove.

The stock market is very “aggressive-reacting” and “regressive-reacting” which means it swings excessively to one side or the other, in what seems like, break-neck speed. Knowing this, we have observed in the past that the market has endured countless wars, epidemics, major shocks, and has always managed to reach significantly new highs over time, often with highs that we never thought possible. To put it bluntly, there may be a lot of money to be made here if you continue to invest when the market is down and during the first few months of the U.S. presidency.

Markets are very manipulated by world events and it is harder for the do-it-yourselfer to know how to invest, not to mention if they can trust what they read or consume off social media and standard media. Of course, we all don’t want to be short sighted when investing for the future but it’s not easy. Consider the long-term advantages of buying into the market at low price points on large-cap blue chip stock picks to capitalize on future profit when the market turns again.

Here is a Trader’s Tip: When you are looking to get into a very volatile, downward swinging market environment it is hard to know when it has bottomed out. Resist the urge to try and time the market. This is virtually impossible and extremely difficult even for the most experienced traders. If you do decide to buy in, and your portfolio goes down further – just leave it. It will come back up. Do not be too greedy here and be going in and out. Often times, this causes a lot more stress, mental anguish and actual true losses. If you want to know when to really get in, it is said that a “Trader’s Tip” is to buy in when the stock market has three full consecutive increasing days. This will mark a shift in the sell-off momentum and although it may go down a little later, the three-day uptick is usually viewed as a sure sign of improvement and recovery.

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Christine Ibbotson is a Canadian finance writer, radio host & YouTuber. For more advice check out her YouTube channel: ASK THE MONEY LADY – Your Canadian Finance Coach.