On Tuesday of this week, American voters will elect the next president, which may determine the direction of the economy for the next four years, and Wall Street has only one trading day left before this.

Traders are discussing various possibilities, constantly checking the latest polls and trends in the election betting market to predict who will be ahead and what that means for their positions. Some speculate that Wall Street is betting on Trump, but they seem reluctant to actually invest in the stock market based on this.

Investment experts all know that predicting the outcome before the election can bring huge profits. But the problem is that the outcome of this election is too disparate, and many cannot bear the risk of error. Eric Diton, President and Director General Manager of Wealth Alliance, said in an interview, "We will not position ourselves based on the election results because it's like flipping a coin. Betting makes no sense."

Most traders expect volatility this week, which may be intense, as there is a high chance of a controversial result, dragging the vote counting for weeks or even months. This also explains why the Cboe Volatility Index has risen to 20 or above in the past four trading days, a level that typically signals increased stock market pressure. This is also why investors are no longer in a rush to pick winners and losers based on who they think will be the next US president.

Dave Lutz, Stock Sales Trader and Macro Strategist at Jones Trading, said, "Polls have always been wrong. It's impossible to tell who the winner is."

Another holding challenge is that there are still many catalysts this week that could affect market trends. The Fed will quickly make interest rate decisions after Election Day, Fed Chair Powell will hold a press conference where he will detail the Fed's rate path. Many US companies will continue to release earnings reports, and chip giant Nvidia is expected to announce earnings on November 20.

This also explains why Lutz did not specifically prepare for the election. His advice is to 'hold some cash' to be able to allocate when short-term opportunities arise, such as knee-jerk reactions in individual stocks or sectors when a winner emerges. He said, 'I think many investors are positioning themselves this way.'

Using Robert Schein, Chief Investment Officer of Blanke Schein Wealth Management, as an example, he said that prior to the election, he had increased the holdings of cash equivalents from the usual 5% to 10%. His strategy is to be prepared to buy assets whenever the inevitably result triggers at least some market volatility.

Anwiti Bahuguna, Global Chief Investment Officer of Northern Trust Asset Management, said in an interview, "Investors need to see the lingering election risks clearly. Due to excessive speculation, traders cannot even position themselves at this point, and traders also do not know which policy proposals of the two candidates will actually pass in Congress."

The market looks nervous, which may not be surprising. The S&P 500 index is approaching historical highs, while the VIX index is above 20. The last time this "panic index" was so high, the S&P 500 index could still maintain its record high was during the March 2021 outbreak of the new coronavirus variant. At the same time, hedge funds are betting on greater price volatility. Commodities.Futures Trading Commission (CFTC)'s latest data shows that investors are significantly reducing their net short positions in US soybean, corn, and wheat contracts, easing bearish sentiment in the market.Data compiled earlier this month by the Commodity Futures Trading Commission (CFTC) shows that large speculators have turned net long on VIX futures for the first time since January 2019.

Rocky Fishman, Founder of Asym 500, stated that options market data shows that traders are staying defensive. He added that part of the reason is the upcoming reports and data over the next few days, including the Fed's decision, financial reports, and inflation data.

Internal company personnel are also hesitant to participate in the stock market. Data compiled by Washington Service shows that in October, only 261 corporate executives bought shares of their own company, the lowest since at least 2017, pushing the buy-sell ratio to the second lowest level since spring 2021. Some Wall Street professionals believe that investors should steer clear of the election hype when looking for safer stock investment opportunities.

Northern Trust's Bahuguna said: "The election is a very low probability event, so we have every reason to expect a volatile period next month. But ultimately, what supports the stock market is decent corporate earnings, strong economic growth, falling inflation, and Fed rate cuts." The company is bullish on US stocks because of the strong US economy, while bearish on bonds to hedge against inflation risks. The company is also overweight physical assets, including infrastructure, natural resources, and real estate, in order to protect the portfolio from future turbulence in the face of continued tight labor markets and strong economic growth.

Others are focusing on corporate earnings, particularly companies with higher-quality balance sheets, as the Fed has just begun to cut rates and rates are still high. Brian Mulberry, portfolio manager for Zacks Investment Management, said, "Rates are still restrictive, with a higher likelihood of increased volatility by year-end, so a more conservative approach is appropriate."

The key to all of this is that in elections without clear favorites, the safest approach for investors is to wait patiently. This is precisely what Wall Street preaches, at least for now.

Mark Luschini, Chief Investment Strategist at Janney Montgomery Scott, said: "If this is a more definitive determination, it will be accepted by the market with little room for exploitation. But in such tense situations, it is best to focus on the long term, maintain a view of the macroeconomic conditions six to eighteen months ahead, rather than just the daily results."