Conviction Buying, Market Spikes, & RIA vs. Broker

Rare Conviction Buying, Spiking Indices, and Historic Gains Post-Election

In this week’s episode, the Money Wise guys discuss how the markets reacted to the presidential election, including conviction buys, historic spikes, and a level of volume rarelyt seen. First, let’s review the numbers from Wall Street. Last week, the Dow was up 4.6%, the S&P 500 was up 4.7%, and the NASDAQ was up 5.7%. YTD the Dow is up 16.7%, the S&P is up 25.7%, and the NASDAQ is up 28.5%. The Money Wise guys are feeling giddy this week, and and the market seems to feel the same. All three major indices are at all-time highs, and it was the best week for the Dow and S&P in four years. In fact, the day after the election gave us the biggest gains the Dow has seen post-election since 1896 and largest post-election gains for the S&P and the NASDAQ in history. The guys parse through the numbers, discuss the opportunity cost faced by those who chose to sit on the sidelines before the election, and what we saw as far as conviction buying and short covering. For more on what the markets usually look like post-election, check out this resource from The Street.

Conviction Buying: A Rare Occurrence

Since the Money Wise guys mention conviction buying in this episode, let’s dig into what this phenomenon is. Conviction buying is when an investor - in this case many - feels absolutely convinced that they have properly analyzed what a stock or stock index will do, as well as being absolutely convinced that they will make an outstanding gain. In this case, conviction buying refers to all those investors who were hedging their bets prior to the election and have now decided to buy in.

In the second hour, the Money Wise guys share important differences in an RIA vs. Broker discussion. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.