Market expectations VS Reality in US Elections

US American Flag. As we approach the US elections, what does this bode for the world?The US election provides a very interesting trading opportunity. It is almost exactly like Brexit. Markets have already fully priced a Clinton win. There is an asymmetry between what markets are expecting and what the actual outcome probabilities are: for example, markets are 100% expecting a Clinton win, while there may in reality only be a 55% chance of a Clinton win.

This means that if Clinton wins, markets remain stable, because the expected happens. However, markets will be in complete shock should Trump win. This means that if he wins, stocks could go down, say, 10% and gold may go up 10%. Who knows what would happen to the dollar? The point is that this is a fantastic trading opportunity, because if Clinton wins, you won’t suffer any losses, but if Trump wins, you could profit if you are invested in the right things.

*This is only an opinion, and not investment advice.

Christiaan van Huyssteen

Christiaan is the Financial Director of the Rational Standard. He graduated with a degree in accounting from Stellenbosch University. Christiaan is a Libertarian and InfoWarrior.

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