Market Strategist: Don't Expect too Much Volatility Before Election

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CFRA chief investment strategist, Sam Stovall believes September will be less volatile than investors are anticipating.

CFRA chief investment strategist, Sam Stovall believes September will be less volatile than investors are anticipating, according to Markets Insider.

The upcoming US election is expected to cause volatility in markets this month, but Stoval used data going back 80 years to determine that September is relatively calm during election years. "A lot of strategists are saying that, as we head into the election, markets are likely to get a lot more volatile," he said. "But actually history says the opposite."

"If you look to the volatility in the three months prior to the election, compared with the non-election years, actually volatility typically is less." 

On Tuesday, the S&P 500 and Nasdaq closed at all-time highs. Stovall did acknowledge that September has been the worst month for stocks since 1945, with an average loss of 0.5 percent. However, the trend has shifted in the past 25 years with stocks gaining around 0.1 percent this month.

He does believe the market will correct before November. "The market is vulnerable to some sort of digestion of recent gains," he said. "History would imply that in the next two to three months we probably could see a decline of anywhere from 5% to 15%."

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