A MId-Convention Thought About Politics and Markets
We're post-Republican and pre-Democrat convention this morning. Trump's in, Clinton soon to be. Expect theories about how market's will react if one or the other gets in. And with today's technology and the ability to grab data and crunch it, some of the analysis may appear rather sophisticated:
"In years when a Republican was elected after 8 years of a Democrat President, when one house was majority Democrat and the other majority Republican, the stock market..."
Or maybe,
In years when a Republican was elected after 8 years of a Democrat President, following 8 years of a Republican President, following 8 years of a Democrat President, stock and bond have..."
Well, you get the idea. Technology makes all these prognostications sound so "scientific." But don't get sucked into this. The best comment I've heard comes from one of our paid sources of geopolitical analysis. It comes down to something that you can likely grasp without any technological savvy. You'll just need to apply some reason and common sense. It goes like this:
What candidates say during their campaigns is designed - for the most part - simply to get elected. Few of them, once elected, do anything they said they'd do. (Once in a while, an item might slip through the smokescreen of campaign cant and wind up on the floor of Congress for a vote eventually. Maybe.) You won't really know what they're going to do until the winner serves 100 days or so in office. So don't commit any of your capital to any market thinking you've got a bead on where things are headed based on the fact that so-and-so was elected.
Which comes down to this: Whether Trump or Clinton is elected, we don't know yet. As the campaign progresses, and the rhetoric (along with accompanying emotions) heats up, you'd do best to either stick with your current investment allocation, make changes based only on the disciplined process you're following now, without consideration of the campaign, or keep the current cash allocation you may have built up intact - unless there's a good reason to deploy some of it based on your knowledge and experience of markets sans any factoring for this or that candidate and their stated platform.
In other words, ignore the politics until someone's elected, a few months have passed, and you have some idea what they're really about, what they're really going to do.
Our process may call for certain buys or sales from now through November, through January (swearing in of the President on January 20th), through the next 3 months plus. That process won't be jiggered to account for what the polls say before the election, what the pundits say after the election, or even what we might think may happen once Ms. Clinton or Mr. Trump is elected. We'll just keep our eyes and ears open post-January 20, 2017 and see what develops.
Then, and only then, might (and we emphasize might) it make sense to adjust our outlook.
What's your plan?
"In years when a Republican was elected after 8 years of a Democrat President, when one house was majority Democrat and the other majority Republican, the stock market..."
Or maybe,
In years when a Republican was elected after 8 years of a Democrat President, following 8 years of a Republican President, following 8 years of a Democrat President, stock and bond have..."
Well, you get the idea. Technology makes all these prognostications sound so "scientific." But don't get sucked into this. The best comment I've heard comes from one of our paid sources of geopolitical analysis. It comes down to something that you can likely grasp without any technological savvy. You'll just need to apply some reason and common sense. It goes like this:
What candidates say during their campaigns is designed - for the most part - simply to get elected. Few of them, once elected, do anything they said they'd do. (Once in a while, an item might slip through the smokescreen of campaign cant and wind up on the floor of Congress for a vote eventually. Maybe.) You won't really know what they're going to do until the winner serves 100 days or so in office. So don't commit any of your capital to any market thinking you've got a bead on where things are headed based on the fact that so-and-so was elected.
Which comes down to this: Whether Trump or Clinton is elected, we don't know yet. As the campaign progresses, and the rhetoric (along with accompanying emotions) heats up, you'd do best to either stick with your current investment allocation, make changes based only on the disciplined process you're following now, without consideration of the campaign, or keep the current cash allocation you may have built up intact - unless there's a good reason to deploy some of it based on your knowledge and experience of markets sans any factoring for this or that candidate and their stated platform.
In other words, ignore the politics until someone's elected, a few months have passed, and you have some idea what they're really about, what they're really going to do.
Our process may call for certain buys or sales from now through November, through January (swearing in of the President on January 20th), through the next 3 months plus. That process won't be jiggered to account for what the polls say before the election, what the pundits say after the election, or even what we might think may happen once Ms. Clinton or Mr. Trump is elected. We'll just keep our eyes and ears open post-January 20, 2017 and see what develops.
Then, and only then, might (and we emphasize might) it make sense to adjust our outlook.
What's your plan?
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