After midterm election, focus on the ‘healthy’ 30%-plus correction headed for stocks
Elections do not matter, at least when it comes to the markets.
Historically, the moves have been small regardless of the outcome. There is, however, a big fish emerging that should give investors pause.
Looking past the political ads and campaign promises, we see a bigger trend which is certain to send the market reeling over the next year. That is the economy decoupling itself from the Fed's easy money.
For the past decade, the Fed propped up markets to incite the "wealth" effect. Now, with the economy on firm ground, the Fed is reversing course. The problem is the Fed is always operating 6 months in arrears meaning that by the time they notice it is time to slow, it is too late.
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The relation between markets and elections are based upon how big industry perceives policy toward them to be under each potential candidate or party. If predicted properly, it's quite possible to profit off the short term market movement. But all of it is just a small deviation in the grand scheme of the markets shouldn't affect long term direction at all.