Friday 6 November 2020

US elections and why emotions matter so much in investing

Took leave today to spend some time with my mum and brother as we went out for lunch and also to get away from work for awhile. The US election has given investors a wild ride with stocks dropping and then going back up again as results are slowly revealed. Though we still do not have a definite answer to who will be the next US president, the stock market during this period has been so interesting. 

The past 3 months have seen the Vanguard S&P 500 ETF (VOO) go from a low of $297 to the current $321. It's been a ride of red and green, lots of red and blue on the television as me and brother keep up with the US election the past few days. 

My portfolio value has since increased and my portfolio size is considered small, being only about SGD 26,000 I can't imagine for those with larger positions, how exciting and nerve racking it is seeing the value of your portfolio fluctuates. Some people just sells off their investment once any bad news is released and this really can make you feel panicky as you are reacting to every piece of news you see.

Tech stocks went back up with the house being very divided with almost half being filled with republicans and half (larger proportion) being democrats, this means that policies will face more resistance and be more difficult to be passed. Tech stocks do benefit from it as this means that regulations will be tougher to be passed which beneficial to the tech companies. 

With US being more divided then ever, it will be an interesting journey ahead. In Singapore, DBS, OCBC and UOB reported their earnings with a drop on Y-O-Y, I believe the current situation is still looking good but as we move onto 2021, it will get harder as government subsidies/initiative stop and when the Banks need to recover the loans, there will be default and this will affect the Banks. 

With so much going on, people will tend to think more about their investments as the volatility can make people feel uncomfortable. With the US elections dragging out longer than expected, more people are facing higher stress levels and anxiety.

Uncertainty is stressful but don't let your emotions get the better of you. Though it is easy to say this, it is hard to implement it, if you feel that you are really very easily affected by the news, reduce your frequency of checking the news and think of other things to do besides checking your investments. In the long run, I feel that getting to know yourself more and managing your emotions are very important. Take care and remember if you feel stressed or anxious, you are not the only one, it is ok to seek help. 

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