What Your Vote Does to the Stock Market

By: Ariana Alvarez

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Illustration by Betsy Susan

I am very far from being an expert in investing, on the contrary, I’m quite a newbie. However, while watching the first (catastrophic) US Presidential Debate, the one thing that went around my mind was, “Oh my, where is my money going?”

Many people underestimate the importance of elections. Yes, voting is a human right, but it affects so much more — it’s not just about the future of law and policies, but also the future of our economy. After the ongoing volatility caused by the COVID-19 pandemic, many investors fear what the outcome of the elections will bring to the Market on top of that.

But what exactly do politics have to do with the markets? Everything that is sector-focused. You see, many people sometimes forget to take into consideration that different candidates have different stances on certain sectors such as healthcare and energy. Therefore, depending on their stances, they will enforce different policies (if elected).

Now you may be wondering, how can I prepare for this? “My vote is just one vote anyways”. Firstly, get that out of your head. Your vote matters, much more than you think it does, because if we have 1,000 people thinking the same thing as you do in each state, and you multiply that by 50 states, that isn’t just “one vote” anymore, is it? It’s actually 50,000 votes.

Step 1: Go and vote. Vote for your future, vote for your wallet, but vote wisely. Make sure you are picking your candidate as cautiously as you are picking your stocks. Just because your family is republican or democrat, it does not mean you have to vote for their candidate too.

Step 2: Do your research. Once you have selected a candidate, keep an eye out for him and his policies, truly see where he stands, and whether him getting elected will favor your sector-specific stock.

Step 3: Make sure you have diversified your portfolio. Even though your vote matters, and polls might give us an idea of which candidate has the lead, always be prepared for volatility. The best way to do this is by diversifying your portfolio. If you have shares in different companies, make sure these stocks are in different sectors. It’s always important to have a Plan B just in case one of your sector-specific stocks is very likely to take a hit from Market volatility.

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Your vote matters. Not just the future of your country, but also for the future of your pocket. So, vote as wisely and carefully as you pick your stocks.

https://www.nytimes.com/2020/09/30/business/wall-street-uncertainty-election.html

https://www.cnbc.com/2020/09/15/market-volatility-is-set-to-swell-after-election-wells-fargo-warns.html

https://www.usbank.com/investing/financial-perspectives/market-news/how-presidential-elections-affect-the-stock-market.html

A lineā — We make responsible investing easy and social. Visit us at http://alinea-invest.com/

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