So much has changed between February and May of 2020. It would be easier, perhaps, to list those aspects of life which have not changed than to consider all the details of life that have undergone radical alterations in those few months.
But one topic of interest that has changed dramatically is how investors envision the stock market will perform in the coming months. Not only is the economic impact of the coronavirus playing a role, but in a few months the country will conduct a presidential election, and the results of that election will certainly have an impact on the stock market.
As part of its special year-long study, Investors and the Election: A Guide For Financial Advisors in 2020, investors were asked to make predictions about how the election will impact the Dow Jones Industrial Average number. Investors were given a range of closing numbers for the DJIA on the final day of trading in 2020, and they were asked that question in both February and again in May.
On February 12, 2020, the DJIA recorded its highest close ever at 29,551.42. That was obviously before the economy began to react to the coronavirus by shutting down much of the daily commerce of America. At approximately the same time as the DJIA closing high, investors were asked to predict where they predicted the DJIA would sit on the last day of trading in 2020.
At that point, a majority of all investors believed the DJIA would be at least above 26,000 by the end of the year, and when asked how they DJIA would react if Donald Trump is reelected as president, 51 percent expected the index to be above 30,000.
In February, when asked to consider the reelection of Donald Trump as president, 8 percent believed the DJIA would sit below 23,000. Asked the same question about the anticipation of a Joe Biden presidency, 19 percent saw the DJIA dropping below 23,000.
In May, all of those predictions had adjusted lower. At the low end, 18 percent of investors said the DJIA would end up below 20,000 if Donald Trump is reelected and 24 percent expected a number below 20,000 if Biden is elected. At the high end, only 8 percent predicted a DJIA above 30,000 in the event Trump is reelected. Only 2 percent made the same prediction regarding a Biden presidency.
Advisors need to know what their clients anticipate in terms of stock market movement going forward. Such predictions will definitely impact investment decisions.
Keywords: election, investors, advisors, Dow Jones Industrial Average, DJIA, Spectrem, Trump, Biden