Tags: technology | stocks | sell | election

No Matter Who Wins, Sell Tech Stocks After the Election

By    |   Wednesday, 07 Nov 2012 07:40 AM

A reliable pattern in the stock market is warning of a decline ahead. The reasons are unclear, but history is clear that tech stocks fall after a presidential election.

Presidential elections bring change in a number of areas. Investors react to the election by buying stocks in sectors they believe will benefit from new policies and selling shares of companies they think will be negatively impacted.

The only certainty we have after an election is that there will be changes to taxes and economic policies. No matter what was promised in the long campaign, the actual choices politicians make after an election are determined by a number of factors.

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The full impact of the changes is unpredictable, even after the elections results are known. It takes years to see results in economic growth, but stock market traders act as if change will be immediate. This leads to increased volatility, and investors might want to consider avoiding the expected volatility in technology stocks.

Investors following technology stocks often use the Nasdaq 100 index as a benchmark. This index consists of the largest 100 stocks traded in the Nasdaq market.

This index has fallen in the first three months of a new president’s term every year since 1993, when an exchange-traded fund became available on the index. In the last five elections, whether we have a new president or one who won re-election, Democrat or Republican, this index has fallen.

Investors can ignore history, but after suffering through two big declines in less than 15 years, it seems prudent to heed the warnings of the past. There should be a chance to buy tech stocks next year at lower prices than investors are paying today.

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MichaelCarr
A reliable pattern in the stock market is warning of a decline ahead. The reasons are unclear, but history is clear that tech stocks fall after a presidential election.
technology,stocks,sell,election
297
2012-40-07
Wednesday, 07 Nov 2012 07:40 AM
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