While many of today’s news headlines will focus on how much voter turnout went up in this year’s election, there was something else, which may be just as important, going up on Tuesday.
It was something more ominous. It was something that has, for the past two months, been “unusually volatile,” according to Greg Hicks, a certified financial planner of Financial Resource Management, Inc.
That something is the Dow, which, over the course of Election Day, jumped 330 points and more than 3 percent.
“There’s a lot of really traumatic things that have happened in the last few months. October was one of the worst months in years,” Hicks, an alumnus in chemical engineering, said. “One of the uncertainties of last month was the election. Now, it doesn’t matter who’s going to win necessarily, but at least we’ll know who’s won. That alone takes out one of the uncertainties of the marketplace.”
Any elation the markers experience, Hicks said, is nonpartisan. As of Tuesday afternoon, he said the election was “too close to call, and I don’t think Wall Street or the investment world are predicting who’s going to win.”
Investors have had a chance to breathe a sigh of long-awaited relief, he said, and “are now going, “OK, let’s move on to other things. We won’t have to think about [the election] anymore.”
Shirking this particular uncertainty from an oversized bucket of worries — lending freezes, a housing market crash and struggling (and failing) gargantuan banks — encouraged investors to buy and sell stocks.
The jump also coincides with the beginning of November, a month that Hicks said usually signifies better market values. Hicks said higher market prices tend to continue through December and, on occasion, into January.
“There’s a term in the investment world called the ‘January effect.’ If January’s up, the year tends to be up. If January’s down, the year tends to be down,” Hicks said. “The trends, that’s what people look for. This year January was down and so this year has been down.”
Hicks said neither he nor anyone else in the investment business — without the aid of a crystal ball — can predict how either the market will fare this January or the upcoming year because these past few months have been so unlike any other months.
They don’t follow trends, and therefore he can’t make a prediction based on cyclical events.
“There’s no one up there technically saying, OK, this stock’s going up today.’ It’s so impossible to figure out on a daily basis what’s going to happen. You see trends over time, but the market is really, really down big time this year,” Hicks said. “Those are really unique events. This year, especially the last two to three months, you’re looking at unique things that aren’t normal. When there’s fear and lack of confidence, then investors flee for safety and the market drops.”