What a year this has been. 2020 has been the most chaotic year I’ve ever lived through, and we aren’t even finished yet. Since January 1st, way too many people have died (RIP Kobe), WWIII almost broke out, the whole west coast of the US is a bonfire, and of course, the infamous COVID-19 turned our world upside down. As 2020 is nearing a close, I wonder what’s in store for the grand finale. After watching the Presidential debate this week, I think the next catalyst for chaos will be this year’s election.
DISCLAIMER: This is just speculation on my part. I really really really hope this doesn’t actually happen, but most of the fingers are pointing to this resulting event.
For those of you that don’t know, during every presidential election in years past, the stock market has always been more fragile and volatile during the last few months of the election year, and market performance tends to waver in the months (and even year) after an election. Volatility is expected during a transfer of power, and rightfully so; changing leaders means changing policies that may affect the economy or country as a whole. This election is no different. September displayed significant losses, starting with the tech sector, that washed away all of August’s explosive growth. Volatility in the therapeutics sector, specifically for those companies still in the race for a vaccine, is expected and has already been demonstrated. However, I’m less concerned with the ebb-and-flow statistics. Let’s take a step back.
This Presidential election will be and has already been, one of the ugliest, controversial, most stressful elections yet. During a brutal pandemic, leaders of countries around the world are doing their best with the situation at hand, and varying priorities for each country translates to varying results. Regardless, amidst this year’s election, and considering the effects COVID has had on the nation, I think there is a pretty good chance that the stock market will see a crash in the coming year. A crash worse than March’s dip, no doubt. A stock market crash possibly even worse than 2008, or even the dot com bust in ’99. It may be a stock market crash that snowballs into an overall economic crash. Think about it: a volatile market amidst a volatile election, tons of stimulus packages in circulation which accelerate inflation and national debt, failing businesses across the country, record-high unemployment rates, and a crippled economy trying to heal during COVID. On top of that, statisticians have stated for years now that the market is due for a huge correction since it has been seeing overall exponential growth. Furthermore, it is a common rule that the market must retrace every 10 years or so. The last crash was in 2008. IT’S 2020! If the market is due for a huge correction, what better time to crash than the present?
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