ST. LOUIS (KMOV.com) -- As the November election draws close, instability in the market is causing concern for some investors.
However, the instability is somewhat expected, as the lead up to a presidential election can often cause trepidation within the market.
Rick Bagy, president of Central Bank of St. Louis, said there is no need for panic over your investments within the market. But, he does encourage people to make a decision about their investments soon and then let the market play out.
"Personally, I've cut back from about 80% invested to 40% or 45%," he said. "I'd rather miss a big drop like we saw in March."
Bagy said the election season, combined with the pandemic, is resulting in some fear within the market. But, the release of a COVID-19 vaccine could cause the market to overcorrect, he said.
"It's also going to mean, in the relatively short term, that the economy is back where it was, everyone is going to be back at work," he said.
Vice President Joe Biden has proposed a $5.4 trillion dollar spending plan. According to Bagy, that amount of spending could help stimulate the economy. But a rollback of President Trump's tax cuts, he said, especially those to businesses, could end up hurting the market long term.
“The market is priced based on a multiple of earnings, so if earnings go down by 10 percent because of the tax increase, then the stock market has to go down by 10 percent," Bagy said.