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Should I invest in stocks and shares after the “Biden bounce”?

Should I invest in stocks and shares after the “Biden bounce”?
Image source: Getty Images.


The Biden bounce has seen markets rally across the globe. Many people are wondering if now is a good time to invest in stocks and shares, or if they should wait. Below I’ll explain everything you need to know.

What is the Biden bounce?

Now that the outcome of the US election has been decided, people are looking towards the future.

After all the recent ups and downs, having a resolution in sight has made things feel more stable and, dare I say it, optimistic.

This positivity has been reflected in the global markets, leading to a number of upward trends, especially in Asia. Even Japan, which has seen little growth since the 1980s, has seen their markets reach levels not witnessed for decades.

Why have the global markets gone up?

It’s likely that markets have responded positively to Biden’s projected victory for a few reasons.

  • Having an (almost) confirmed election result means more stability, which leads to less volatility and more confidence in the economy.
  • Markets may have risen because countries around the globe are more positive about the prospect of trading with the Biden administration. This positive sentiment has been signalled by the fact that most of the growth from this rally has been within international markets.
  • There has been lots of news recently about Covid vaccine trials. This again will give people and businesses a more hopeful outlook for the future. Armed with a vaccine, Biden may prove more successful than Trump in dealing with the coronavirus.

It’s impossible to truly tell what gains are the result of the election result, and what gains are attributed to other factors, but the unquestionable result is that global markets have gone up.

What does this market rally tell us?

Markets can rally for one reason, or a hundred reasons.

People are understandably wary that this Biden bounce could lead to a Biden correction. In which case, there may be an opportunity to buy back into the market at a lower price.

This rally is another great example that there will always be reasons for the markets to move. Up or down.

To combat this uncertainty, we all need to have an investment strategy that is accepting of the unknown. Sometimes this is more down to our own psychology than our actual investments.

Is it best to invest now, or wait?

The best advice when it comes to investing is to ignore the majority of news around market movements. The constant barrage of information makes compelling television, but it shouldn’t impact your long-term investment strategy.

There are always going to be factors that pull the market up, and equally exciting reasons for it to be pushed back down. For the most part, it’s all just noise and you don’t need to listen to it.

The most important thing for you to do is to devise an investment strategy based on your own personal capabilities, and stick with it.

If you’re completely new to the concept of investing, you should check out our comparison of the best share dealing accounts to get started with. Or for those already well versed in investing, make sure you’re getting the most out of your investments with one of our top-rated stocks & shares ISAs.

Timing the market

Waiting until after this current rally to invest in stocks and shares would essentially be an attempt to time the market. Many have tried and failed to time the market.

Timing the market always sounds very simple, but the truth is, it is an extremely difficult thing to do successfully. No one truly knows what’s going to happen.

Those on the sidelines waiting for a dip to buy back into the markets may find themselves waiting a long time if this the beginning of a global bull run to new records.

On the other hand, the markets could take a downturn once the atmosphere of positivity has somewhat dwindled and attention turns back to the economic disruption of the coronavirus.

Takeaway

Whether there’s reports of a Biden bounce or a Trump tornado, stick to your game plan. If you need some investing inspiration, take a look at some of the best ways you can start investing your money.

Don’t try to time the market and don’t let something you’ve read in the news put you off the idea of investing in stocks and shares.

Spend more time and energy doing some solid research into sound investments and creating an investment strategy that suits you and your goals.


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