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Will Trump Issues Cause a Stock Market Crash?

Will Trump Issues Cause a Stock Market Crash?

June 11, 2024

What we know from history is stock markets can be very volatile when the world is nervous, writes Peter Watson.

There is potential for periods of nervousness ahead.

Donald Trump, the former president, was recently found guilty on all 34 counts by 12 members of the jury. Immediately after receiving the verdict, he staged an angry rant against the judge, who will issue his sentence on July 11.

The political drama will continue a few days later when the Republican party hosts its convention to choose a leader that will compete against the Democrats in the US November presidential election.

Any of these events could ignite a violent response from his faithful. That is the unknown, that is the risk.

Would it affect the stock market?

We can learn from the past. When there is a crisis, the stock markets can react quickly. Volatility can be extreme and includes both losses and gains.

The fans of this potential political fire will be stoked by the media who will be having a heyday. Disasters or the fear of disasters creates an insatiable appetite for news.

News can influence investor decisions.

Remember COVID-19? Then suddenly the bottom fell out of the stock market and prices tumbled. Just as quickly there were record-breaking recoveries that sent stock prices soaring.

It is important to remember a few lessons of the past. Volatility is an extreme movement in the value of stocks, both up and down. There has never been a stock market crash that has not fully recovered and gone on to new high values.

This article is not meant to be a prediction but an acknowledgement we are entering a period of extreme political uncertainty.

Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through  ACPI is a full-service investment dealer and a member of the Canadian Investor Protection Fund (“CIPF”) and the Canadian Investment Regulatory Organization (“CIRO”).  Investment services are provided through Watson Investments, an approved trade name of ACPI.  Only investment-related products and services are offered through ACPI/Watson Investments and covered by the CIPF. Financial planning services are provided through Watson Investments. Watson Investments is an independent company separate and distinct from ACPI.