How to Navigate Market Chaos as Billions Shift Ahead of Tomorrow

Tomorrow’s election could shake the market, but here’s the truth: if you’re betting on political outcomes alone, you might miss the real prize.

Billions of dollars are changing hands as investors scramble to position themselves, eyeing sectors like tech, energy, and banks.

But the savviest players know it’s not about who wins or loses. It’s about navigating a web of global forces that will keep driving prices long after the votes are counted.

With tensions escalating around the world and economic signals flashing uncertainty, your best shot at profiting in this environment is to cut through the noise, focus on the underlying trends, and ignore the hype around “Trump trades” or political quick wins.

Betting on Politics: The Myths and Realities

The "Trump trades" just simply aren't what the media has made them out to be.

Take Trump Media and Technology Group (DJT), which operates his Truth Social network.

DJT has been a popular choice among election traders, with its stock skyrocketing in sync with Trump’s polling numbers—at one point tripling as his odds improved.

But DJT’s story is more complicated. Despite the hype, the company is sitting on shaky financial ground, with sales in the second quarter totaling just $836,900.

Meanwhile, operating losses spiked to $18.7 million, a fivefold increase.

With a market valuation of $6.1 billion, DJT’s value is propped up by sentiment rather than fundamentals, making it a risky play for those banking on political influence alone.

Similarly, private prison stocks like Geo Group and CoreCivic have attracted attention as potential Trump trades.

These companies surged when Trump’s polling odds improved, as investors anticipated a return to stricter immigration policies.

However, recent dips have reflected the volatile nature of politically driven trades, as broader market factors come into play.

While there’s a logical connection between Trump’s policies and the performance of private prisons, these stocks have shown that they’re not immune to market-wide fluctuations, making them a less-than-certain bet.

The dollar and bond yields have also seen an upward trend, which might look like another Trump trade on the surface.

But these gains have less to do with election predictions and more to do with solid economic data, as the dollar and bond yields typically rise in a strong economy.

Since early October, the dollar index is up about 2.5%, yet this increase reflects economic fundamentals rather than political speculation, cautioning investors against reading too much into its correlation with the election.

Finally, Bitcoin and gold have both seen significant movement recently.

Trump’s promise to make the U.S. a “crypto capital” has fueled optimism around Bitcoin, which rose approximately 15% since early October. However, day-to-day shifts in Bitcoin’s price have only loosely correlated with Trump’s odds, suggesting that its rise may be driven more by market sentiment and general economic uncertainty than by political factors alone.

Gold, up around 7%, is largely reacting to concerns about global tensions and the dollar’s role as a reserve currency—indicating that, like Bitcoin, its value isn’t purely tied to election outcomes.

Looking Beyond Politics: The Real Market Drivers

Elections capture the public’s attention, but experienced investors know that the real drivers of market performance lie in a complex matrix of global factors:

• Geopolitical Tensions: The conflicts in Ukraine, the Middle East, and the South China Sea are shaking markets. According to JPMorgan, the S&P 500 has averaged a modest 1.3% return three months after significant geopolitical events, proving that the broader market often rebounds—but not without volatility. Any escalation in these regions could affect defense stocks and energy markets for months, if not years, regardless of who wins tomorrow.
• Interest Rates and Economic Policy: With inflation still in the picture, the Federal Reserve has been aggressively managing interest rates to rein it in. For every 1% increase in interest rates, stock prices tend to fall by about 5%—a significant impact that has little to do with politics and everything to do with the Fed’s inflation targets. Recent jobs reports show a resilient economy, suggesting the Fed may hike rates further, which could strengthen the dollar and strain emerging markets reliant on dollar-denominated debt.
• Oil and Energy Markets: OPEC’s decisions on oil production and the U.S.’s recent releases from the Strategic Petroleum Reserve (SPR) continue to impact energy prices worldwide. A 10% increase in oil prices can trim global GDP by 0.2%, slowing down sectors across the board. This isn’t merely a Trump or Harris issue—it’s a global one that will ripple across portfolios worldwide.
• Bitcoin and Gold Movements: Bitcoin and gold have climbed, with Bitcoin gaining around 15% and gold approximately 7% since early October. But attributing these rises solely to political outcomes is misleading. Gold, for example, has risen due to concerns over the dollar’s future as a reserve currency and global financial instability, while Bitcoin’s day-to-day fluctuations are often driven more by market “vibes” than concrete policies. While a Trump administration may offer a friendly stance on crypto, the asset’s volatility makes it a risky political play.

Why Betting on Election Outcomes is a Risky Strategy

One of the biggest missteps investors make during election season is betting on “political trades” without considering the broader landscape.

It’s tempting to assume that a Trump or Harris victory will be a sure indicator of market winners and losers, but history has shown that election-based investing is fraught with pitfalls.

For instance, healthcare stocks were initially expected to rise under Trump due to his opposition to Obamacare, but they’re down about 3% since October.

Solar stocks, predicted to fall under Trump, have actually outperformed the oil sector by a slight margin.

And while regional banks surged on expectations of lower regulations, the biggest potential winner, Flagstar Financial, saw sharp declines, defying the trend.

The takeaway?

Betting on politics alone overlooks the multitude of factors at play, and you could end up on the losing side if you’re not careful.

Your Election Profit Blueprint: Focus on Fundamentals

The most profitable path through this election season isn’t about predicting who will take the White House. Just like CJ wrote about last week. Read that and refresh yourself right here.

Instead, it’s about securing your portfolio with resilient assets that can withstand the turmoil of global shifts and unpredictable policy outcomes. Here’s how to position yourself:

• Stick to Strong Fundamentals: Invest in companies with stable cash flows, competitive advantages, and minimal debt. Industries like defense, infrastructure, and technology have long-term demand regardless of the administration in power.
• Diversify, Diversify, Diversify: While it might be tempting to go all-in on a perceived political winner, a diversified portfolio is your best defense against volatility. By spreading investments across sectors, you can reduce exposure to single-source risks, like policy reversals.
• Think Long-Term: Short-term market swings around the election can lead to sharp losses if you’re making emotional moves. History shows that maintaining a disciplined, long-term approach offers more consistent returns than political speculation.

In the end, it doesn’t matter whether Trump or Harris wins; what matters is how you approach the market in the face of uncertainty.

Stick with these strategies, and you’ll be well-positioned to profit not just from election day, but from the economic reality that follows.