How might investors react to potential policy changes during political elections?

Investors often adjust their portfolios to minimize risk in response to potential policy changes during political elections because such changes can impact market stability and economic forecasts. Political elections can introduce uncertainty regarding future regulations, fiscal policies, and economic strategies, which can affect corporate profits and stock valuations.

In preparation for the potential outcomes of these elections, investors may reassess their holdings, favoring more stable and less volatile assets or sectors that are likely to be less affected by the changes. This strategic adjustment helps to protect their investments from potential downturns or unfavorable shifts in policy. By taking a proactive approach, investors aim to safeguard their portfolios against uncertainty and volatility that typically accompany election seasons.

While the other choices may represent various investor behaviors, they do not effectively capture the typical strategic response to uncertainty brought about by elections. Adjusting portfolios is the most prudent reaction in the context of potential risk management.