Investing & Politics

As another presidential election draws near, many have concerns about the potential outcome and what, if any, actions should be taken in your portfolio. Here are our thoughts...‍

Should you adjust your portfolio? ‍

Absolutely not.

Investment decisions should be based on your life goals NOT on short term market movements, current events, economic forecasts....or elections.

Don't believe us?

Take it from the best investor of all time, Warren Buffet, who famously said:

"If you mix politics with your investment decisions, you're making a big mistake."

As a strict rule at Gg, we never make investment decisions based on politics.

In fact, we never attempt to predict or time the market… ever.

We know it's hard.

But that's why it's essential.

We can't predict or time what the market will do surrounding an election and, despite what you might hear, neither can anyone else.

Presidents and congress affect laws that can impact various things. The government can impede and temporarily penalize the flow of capital, but it cannot permanently stop it. Most importantly, it can never stop human ingenuity.

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The reality is that the president, and the government, cannot force a business (let alone 500 of the largest most well capitalized, most profitable companies in the world) to lose money for an extended period of time.

No matter who gets elected, nor what their policies are, superior companies will continue to thrive by acting in their shareholders best interests.

Faced with taxation and regulation, these businesses simply stop doing whatever the government decides to punish. They protect their capital, wait for the current regime to be replaced and re-emerge when the political storm blows over.

Great companies take on adversity as an opportunist, not a victim.

And so should you when it comes to investing and your portfolio.

This is not only a lesson in history, but one of common sense.

Equity is the only asset which purely captures human innovation.

In time, companies will find other avenues to earn returns, and pay dividends to shareholders. Since earnings and dividends drive stock prices over the long run,  innovation and financial discipline will be rewarded in the future.

Every four years (and every two for congress), we get to revisit our political decisions.

This is the promise of democracy.

Presidents, congress and elections are transient.

The national political temper is cyclical.

This is not at all to say that elections don't matter for what happens in our lives.

They do.

And they definitely can impact our daily lives in a variety of ways.

By all means, get out and vote.

Capital, however, is forever rational in the long run.

If you’re concerned or have additional questions, please reach out anytime.

But never let politics influence your life or investment decisions.