Investor fears spike over possible contested outcome


A disputed outcome to the upcoming U.S. presidential election in November is now the primary concern for investors, topping a second wave of coronavirus.

This is according to a survey carried out by deVere Group, who asked over 700 clients ‘What is your biggest investment worry for the rest of 2020?’

The number one investment worry was a contested U.S. election (72%); the effect of a second wave of Covid-19 (18%) and the U.S.-China trade war (5%). The remaining 5% was comprised of geopolitical issues such as Brexit.

The 735 people who took part in the poll are resident in the UK, North America, Europe, Asia, Africa, Latin America, and Australasia.

We can clearly see that investors across the globe are starting to become seriously concerned about the U.S. presidential election.

However, it’s not about whether Trump or Biden comes out on top, it’s about the impending possibility of a disputed outcome.

As it stands, President Trump is already questioning the election’s legitimacy, increasing the chances of a contested result and subsequent constitutional crisis in the world’s largest economy.

Therefore, investors have become increasingly fearful that this will lead to massive bouts of volatility in the markets in the U.S. and around the world.

It’s highly likely that any volatility stemming from the election will have an immense impact for perhaps two to three weeks.

As always, investors should remain in the market at this time. Indeed, to my mind, there are two key reasons why investors should build up their portfolios during times of volatility.

First are the benefits over the long-term. Of course, there are many unknowns, but the performance of stock markets does tend to go up over the longer-term.

As such, for this very reason, investing in equities over the long-term is typically universally recognized as one of the best ways to accrue wealth.

Should investors not top up and sufficiently diversify their portfolios in times of volatility, they are pushing back the longer-term advantages they could start to reap.

Second, the buying opportunities. Investors can put new money into markets at lower prices during see-sawing markets. A slump in the market indicates the availability of high-quality equities at more attractive prices.

A contested outcome of November’s U.S. presidential election will undoubtedly send the stock markets into a short-erm tailspin, which is playing on investors’ minds.

However, it’s important that they use the volatility to their advantage wherever possible.

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

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