Experts: Investors Will Enter Risk-Off Mode in Wake of Election

Wednesday, 07 Nov 2012 09:08 AM

By Dan Weil

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For the past three years, financial markets have been in a risk on-risk off dynamic.

When things have looked good, such as accelerating U.S. economic growth, investors have leapt out on the risk spectrum. But when things have looked bad, such as Europe’s debt crisis, investors have shrunk from risk.

Now that the election is over, President Barack Obama’s victory means little, experts say. That’s because there are enough financial woes in the world to keep the markets in risk-off mode.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

There’s the U.S. fiscal cliff, which reaches its peak Dec. 31; Europe’s debt crisis, which periodically raises its ugly little head; and China’s economic slowdown, which coincides with a change of political leadership.

“I don’t see a swift re-entry into risk assets, because there are still lots of different catalysts” for uncertainty after Obama’s win, Nick Maroutsis, a managing director at money manager Kapstream, tells CNBC.

“We have the fiscal cliff, and after the fiscal cliff, we still have Europe. Ultimately investors are likely to remain cautious. They will dip their toes into the markets and focus on equities in the U.S., then Asia and Europe.”

MarketWatch columnist Mark Hulbert also sees little impact from Obama’s victory. History debunks the idea that presidential elections “bring about a change in the economy or the market’s major trend,” he writes.

“[H]ype notwithstanding, both parties end up managing the economy in profoundly similar fashions.”

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

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