The transition of power during elections often creates uncertainty in the financial markets. However, experts from PGIM MF argue that election risks are transient and that markets tend to follow underlying fair value. They believe that once the election results are known, the markets will adjust to the new reality and stabilize. Investors are advised to focus on long-term trends and fundamentals rather than being swayed by short-term election-related volatility.

According to the experts, markets tend to price in the potential outcome of elections well in advance. The market participants analyze various factors including the electoral climate, the policy stance of the candidates, and the potential impact on the economy. As a result, the market’s reaction to election results is often a reflection of the expectations that were already priced in.

The experts also highlight the importance of focusing on the underlying fair value of the market. They emphasize that market movements driven by election-related factors are often temporary deviations from the fair value. In the long run, the market tends to gravitate towards its underlying fair value, which is determined by the fundamentals of the economy, corporate earnings, and other macroeconomic factors.

Investors are advised to adopt a long-term perspective and not make knee-jerk reactions based on election-related events. Instead, they should stay focused on their investment goals and maintain a well-diversified portfolio. Short-term market fluctuations due to elections can present buying opportunities for disciplined investors who are willing to look beyond the noise.

In conclusion, while elections may introduce short-term volatility in the financial markets, experts from PGIM MF believe that these risks are transient and that markets tend to follow underlying fair value. It is important for investors to stay informed, focus on the long-term trends, and not let short-term election-related events dictate their investment decisions.