Elections: buy the rumour, sell the fact
Labour is virtually certain to lose a general election within the next 12 months. So how do stocks typically behave when there's a change of government?
Labour is virtually certain to lose a general election within the next 12 months, says Buttonwood on Economist.com. So how do stocks typically behave when there's a change of government? It seems it's a case of "buy the rumour, sell the fact".
According to ING's Gareth Williams, stocks tend to do better before the election than after it. In 1979, for instance, the market climbed before the Conservative victory, but lost 7% in the following four weeks.
So stocks will probably rally in anticipation of a Tory win, but the rebound will dissipate especially since this time round there will be "a hell of a mess to clear up".
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