Having now traded through five election cycles, I’ve noticed a few themes that just seem to never go away. Some of them are quite obvious, while others seem to grip the market in an intense way, for example:
1. As the election nears, the sheer amount of content begins to increase. It starts off quite gradual, but now that summer is over, you’ll only see more of it.
2. For example, at the start of the year, you might say that 1 in every 100 financial articles mention the election in some way. By the time summer is over, roughly 1 in 10 mention the election in some way.
3. When I began managing my own account in 2008, platforms like X (formerly Twitter) had a much slower pace. The volume and speed of information shared was a fraction of what it is. However, in essence, nothing has changed in the sense it’s still as polarizing as it’s always been.
4. I do have to give the content creators credit as the sheer creativity has dramatically improved as well. I think we underestimate how far a video or image goes compared to the mostly text post posts from 10+ years ago.
5. I remember when getting 1k+ likes on a political tweet was considered groundbreaking. Today, viral content often reaches 100k+ likes. I think this has also caused people to think it’s “bigger than ever” or “more divisive than ever” when it’s actually just louder than ever. The simple fact is you can just hear more things and viewpoints if you’re online enough.
6. This natural increase in coverage and social posts ensures that more traders, investors, and other participants believe that the election is going to cause absurd volatility. If everyone is talking about it, then it must move markets.
7. I have personally found that this increased chatter generally shows itself as a self-fulfilling prophecy through the occasional VIX spike as the date nears. However, I have yet to see a prolonged spike before or after the election. From my view, 2016 stands out as the outlier. That was a shocking night for futures and FX markets.
All in all, my takeaway is simply that awareness of the increased noise is what matters most. Only by being aware of the noise can you remain super composed.
It’s to be expected.
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