Elections and Investing

It is generally accepted that politics and religion are not suitable topics for discussion in polite company.

That is probably good advice, but media coverage of politics and the election is going to intensify over the next three months.  This is normal, although this election cycle is generally considered to be unusual.  Both candidates have exceptionally high negatives, and some observers have suggested that the electorate is more polarized than in many previous election years.

Highly concentrated media coverage of the election may tend to drown out company and economic news that is important to investors.  In addition, both parties may seek to use a carrot (goodies from Washington, if we win) and a stick (catastrophic outcomes, if the other party wins) in appealing to voters.  Some of the carrots may be very expensive and some of the sticks may be highly exaggerated.

We are also likely to see the media giving air time to extreme positions and general fear mongering.  Investors should remember that portfolio strategy is a long term activity.  Try to avoid the hysteria and focus on your own financial objectives.  Regardless of who ultimately wins the White House and the final tally for the House and Senate, change is likely to be gradual.  This should give you and your advisor(s) time to make any appropriate portfolio adjustments.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®