3 Election-Day Stock Market Truths


The Dow Jones Industrial Average (INDEX: ^DJI) and the broader S&P 500 (INDEX: ^GSPC) are up 0.6% and 0.4%, respectively, as of 10:10 a.m. EST. There is good reason to believe volatility will be muted today as stock traders decline to make big bets ahead of the election result.

The macro view
Pundits will dedicate huge amounts time and pixel space to analysis of the economic and stock-market impact of this election. However, here are three simple truths the pundits will not be highlighting:

1. No one is certain regarding the election result
An objective reading of the data suggests that one of the candidates is heading into this election with better odds of a win than the other. However, we're still in the realm of odds, not certainties; anyone who talks in terms of the latter is selling you something.

2. No one knows how the stock market will react to the election result
The previous item is open to quantification. The knock-on impact of the election result on stocks is subject to much higher uncertainty than that. "Forecasts" of the market's short-term reaction to the election outcome are nothing more than guesswork€“ -- and not even educated guesswork, in most cases.

3. The best way to position yourself for the election is not to position yourself
Point No. 3 is a corollary of point No. 2: Don't make bets on the election in the stock market. You don't have any edge in this arena. (Once the outcome is known, however, one or the other administration could act as a catalyst for specific sectors and stocks.€“ Click here to receive our free report: "These Stocks Could Skyrocket After the 2012 Presidential Election.")

There -- I've just saved you the trouble of reading 90% of what will be published on these topics today.

The micro view
Drugstore chain and pharmaceutical-benefits manager CVS Caremark (NYS: CVS) reported earnings of $0.85 per share in the third quarter (excluding one-time items), beating the consensus estimate by a penny. Revenue rose 13% to $30.2 billion, which also topped expectations; that performance was largely achieved thanks to the pharmacy benefits business, which grew 22% year on year.

The article 3 Election-Day Stock Market Truths originally appeared on Fool.com.

Alex Dumortier, CFA has no positions in the stocks mentioned above; you can follow him @longrunreturns. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Originally published