tibbitts wrote: ↑Sun Sep 20, 2020 4:14 pm
Loandapper wrote: ↑Sun Sep 20, 2020 3:29 pm
I know, I know: Time in the market, not timing the market.
I have some new cash (about 6% of total portfolio) and I'm curious whether anyone else is waiting until after the US election in 45 days?
Did you wait in 2016? What was the result?
In 2016, Clinton was ahead in the polls and was expected to win on election day. She didn't. The market was actually climbing thoughout most of 2016. Every time it looked like Trump would win, the market would drop. Therefore, I expected that when Trump won, the market would fall. I therefore rebalanced just before the election (out of cycle) so that I was ready either way. This took profits off the table instead of letting the equities keep running.
The market did indeed dip in the morning after when the election results were announced. But it recovered and was positive by the end of the day. And it went on a tear, continuing the bull market. In retrospect, I wish I hadn't rebalanced, as I would have been better off if I had let the profits run. I would have ended up rebalancing 3-4 months later anyways.
The stock market partially runs on emotions. Elections affect emotions. Therefore, political events can have a short-term impact on the stock market. However, you should be investing with a long-term mindset. It's not a question of where the market will be in 2 months, but where it will be in 30 years. You don't know if the market will go up or down the day after the election.
I'd advise you to make sure your emergency fund is fully funded, then follow your investors policy statement. Your asset allocation currently has 6% in cash. What does it say to do?