Wikipedia defines hyperbole as the use of exaggeration as a rhetorical device or figure of speech. It may be used to evoke strong feelings or to create a strong impression.

In the current heated political environment, hyperbole seems to be the primary method of communication. Investors need to be very careful to parse what is being said and seek to determine to what extent the rhetoric should be taken literally.

Consider; failure to reach agreement on funding the federal government is often referred to as a government “shutdown”. Clearly, this is not literally true. We have a “slowdown” or “selective shutdown”. Whatever you want to call it, a significant portion of the government continues to be fully functional.

We are also hearing, often with increasing intensity, the word “default”. What does that mean? Is the treasury going to stop paying interest on the government debt, or is it more likely that critical payments will be made while others are deferred?

You decide. But before making any substantive investment decisions, it might be helpful to carefully assess what is being shouted from the rooftops in the context of what is likely to actually happen.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA