Investors Cite Both Foreign and Domestic Political Uncertainty as Biggest Risks for Market Right Now

This week’s special question asked AAII members what they perceive as the biggest risk currently facing the market. The range of responses was far and wide. Approximately 38% of respondents name geopolitical uncertainty as the biggest risk to the market, particularly the ongoing trade war with China. In an overwhelmingly split group, 36% of respondents say that political instability is the biggest risk; with half of these respondents citing President Donald Trump and the other half naming Congress and/or the possibility of a Democrat being elected president. Additionally, 7% of respondents name the Federal Reserve and interest rates as their biggest concerns, while 10% say consumer sentiment and media influence and 9% say valuations.

Here is a sampling of the responses:

• “Trade, Brexit and political unrest in the U.S. and Europe.”
• “Impeachment proceedings and Washington risk. Our political parties’ polarization is going to cause market friction that will weigh on less-than-stellar earnings reports.”
• “Stock valuations are too high, volatility is increasing and the trade wars only make it worse.”
• “Politics and trade. Everyone knows something, everything and nothing.”
• “The Fed now has limited tools for stimulating the economy away from a recession.”

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