Don’t Count on Lazy Days of Summer

This isn’t going to be a lazy summer for the stock market.

The summer season is always fairly volatile mostly thanks to traders taking their vacations, hence the old adage, “Sell in May and go away.” Personally, I’ve never bought into that, but then I like to buy on dips. I think this summer may be worse than usual though, given the growth woes in Europe and Asia mixed with hysteria from talking heads droning on about the impact of the presidential election on markets.

Thinking back to the 2008 and 2012 elections, it’s fair to say they were pretty contentious. Granted a lot of external factors affected the market, especially in 2008, what with the Financial Meltdown and all. By 2012 the recovery was under way, but the market took a couple of big dips that year, most notably one in October that didn’t turn until suspiciously after Election Day.

Given how politics have played out so far, this is going to be one, ugly summer politically speaking. Hillary Clinton seems to have a love-hate relationship with the Democratic electorate; and the GOP convention will likely be tumultuous. So there’s a lot of dark money to be spent and a lot of mud to be slung in the coming months.

Of course the Republican primary added another potential market wrinkle last night, with Donald Trump pretty much sowing up the nomination with his win in Indiana, and Ted Cruz bowing out. I don’t want to weigh in on the individual merits of either of the now presumptive nominees, but Trump’s plan to impose tariffs on exports from China, Mexico and other countries hasn’t gone unnoticed.

As I write this barely twelve hours after Trump’s Indiana win, senior officials from trade and foreign ministries across Asia have already gone on record about their concerns over a Trump presidency. The almost universal worry is that a new American tariff regime could spark a trade war, especially if China hits back with its own tariffs. That could quickly spiral out of control, creating collateral damage for American multinationals that do business in Asia, a prospect that prompted several American CEOs to express concerns of their own.

Again, I’m not saying a vote for Clinton is better than a vote for Trump or vice versa. But as a veteran of a few presidential silly seasons, I can tell you it really shouldn’t matter to smart investors who will win the election. If you don’t let your own personal politics get in the way, there’s always money to be made. Our job is to figure what a particular president’s goals are, handicap their chances of achieving them and help you to invest accordingly.

And no matter the tumult, our Global Income Edge portfolios are tailor-made to weather volatile markets, having been stress tested again and again. While our holdings may have their ups and downs, they pay dependable dividends that help to take the sting out. So if you’re anything like me, you’ll keep buying during what’s likely to be a summer to remember.

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