The article addresses the question of whether it is worth investing in the stock market based on electoral polls, responding that this is a very speculative strategy. The analysis starts from the principle that investment in stocks tends to appreciate for two main reasons: the reduction of interest rates and the growth of the economy or of specific economic sectors.
When interest rates fall, any asset that provides a payment flow appreciates, including stocks. Although stocks do not distribute a constant return like fixed income securities, investors receive dividends periodically, which represent a part of the company's profit distributed to shareholders. With lower interest rates, the value of these dividends over time increases.
The growth of the economy benefits those who invest in stocks because it increases company profits and, consequently, the potential for dividend distribution. The article suggests that, if there were a candidate favorable to high interest rates and against economic growth, and another who wanted to reduce interest rates and improve the economy, it would make sense to make this bet on the stock market based on electoral polls. The text is interrupted before completing the reasoning.
