The markets have been in the election mood for a while. No matter where you go, the conversation always turns to who will come to power and how many seats each party will win. There’s no escaping election fever.
The trouble is not even that people want to predict what will happen. There is a certain thrill to getting predictions right. The trouble is that speculation is becoming the foundation for important portfolio decisions.
Investors are not just trying to guess who will win the elections. They are also trying to calculate how many seats each party will win, whether markets will be disappointed or satisfied, and if the political outcome is conducive to reforms.
When there are so many moving parts and we’re trying to hit a target, the chances of missing are much higher. Investors must learn to prioritise process over outcomes in the face of uncertainty. Elections are just another event in our journey as investors. The way to aim past the moving parts is to stick to the discipline of profit booking, asset allocation, and consistent investing.