2 min read

Whacky Wednesday - US Election 2020

Some of you might be glued to the television, others to their computer screens. If there's one thing I learned during the last election is that you can be wrong or right, but what is more important is that you make money.

I still remember the last election very vividly, I was expecting Hilary Clinton to be the first lady president. I wasn't the only one, even Newsweek's cover had leaked with "Madam President". So when Trump was elected, I was not surprised (yes, you read that right). I also believed that the market would correct or crash after that announcement.

I was really wrong. Really 'expensively' wrong. Whatever profits I made during that year was wiped out with Trump's win. What's worse is that the rest of the time, I saw unusual volatility, especially after Trump Tweets. Markets would move in seconds a few hundred points.

That was enough for me to retire from trading in US stocks. And so the story ends there, for now.

But this US election is going to be no less dramatic. This time I feel Trump will win, despite what the media channels say (Yes, I'm writing this on 4 November at 9:30 IST and haven't glanced at the news channels). There's a lot of controversy about this election, and I think it will be a historically important event.

If you're in India, this shouldn't bother you too much. Who cares what happens in the US, how is India going to be affected. Well, it's not just India, but many countries across the world that will be affected by the outcome of this election.

If you believe in the Butterfly Effect, you'll understand what I'm talking about.

So, my solution for now is - DON'T TRADE. As much as I'm tempted to trade, I'm recalling the words of a famous trader:

"[Traders] who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make the big money." - Nick Leeson

Most of the time you can be better of by sitting on your hands, than by actively trading. This may sound like contrarian advice. And it probably is, but there is a way to save your itch to trade and that is by trading small, trading often.

That may just be the antidote for you to continue practicing, without risking a lot.

Do as you will. As for me, I may have to wait for a week or a month to see how this election outcome comes. Why a month? Well, Abid at Sensibull has put together a nice 25 minute presentation on the US Elections. Give a watch and you'll understand why.

25 Minutes on US Elections & what you need to know.