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Possible Contested U.S. Election? Investors Should Prepare Now

Summary:
Investors need to be prepared for substantial market volatility should there be a disputed outcome in this week’s U.S. presidential election.Joe Biden continues to lead Donald Trump in the national polls and the markets have already priced-in a win for the Democrats.This has been seen over the past few weeks as investors have been piling into renewables, industrials and other sectors that could benefit from Biden winning the keys to the White House.Nevertheless, history has taught us not to underestimate Donald Trump. Although over 81 million may have already cast their vote ahead of Tuesday’s election day, these voters will more likely be Democrats.Indeed, Trump has encouraged his supporters to wait and vote on the actual day due to alleged concerns regarding mail-in voting.Therefore, we

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Investors need to be prepared for substantial market volatility should there be a disputed outcome in this week’s U.S. presidential election.

Joe Biden continues to lead Donald Trump in the national polls and the markets have already priced-in a win for the Democrats.

This has been seen over the past few weeks as investors have been piling into renewables, industrials and other sectors that could benefit from Biden winning the keys to the White House.

Nevertheless, history has taught us not to underestimate Donald Trump. Although over 81 million may have already cast their vote ahead of Tuesday’s election day, these voters will more likely be Democrats.

Indeed, Trump has encouraged his supporters to wait and vote on the actual day due to alleged concerns regarding mail-in voting.

Therefore, we may well see a significant shift in numbers with Trump making gains on Biden.

Trump has said on several occasions that he could contest the outcome of the election should it be unfavurable to him.

This could result in a long drawn out post-election struggle in the courts that could take months to resolve.

This major political uncertainty within the world’s largest economy would lead to substantial market volatility worldwide.

As such, investors should be readying themselves for this possible scenario.

Of course, volatility it not always a negative. It can be very useful to investors. They should be asking themselves: ‘Is my portfolio best-positioned to mitigate the potential risks but to seize the opportunities?’”

Markets despise uncertainty, so should we see a contested result, safe haven assets will receive a boost, particularly non-sovereign classes such as gold and Bitcoin.

The reality is that the political impasse in the United States may well last into 2021.

If this is the case, the markets will echo the chaos and stay profoundly turbulent.

Therefore, to grow and safeguard their wealth, investors should remain in the market and make sure their portfolios are sufficiently diversified to make the most of the opportunities that will inevitable arise due to volatility.

Nigel Green is CEO and founder of deVere Group, one of the world’s largest independent financial advisory and fin/tech organizations.

Photo: Gage Skidmore

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