For investors, the time horizon is a crucial element in formulating a portfolio strategy. It is important to understand the difference between near term cash requirements and longer-term investments that, for many, are directed toward providing for a comfortable retirement.
On the other hand, the political class is focused on the next election cycle, which, in many cases, is just two years.
This dichotomy may account for the widespread short sightedness of many elected and/or appointed politicians. This is a possible, perhaps a probable reason for the political enthusiasm for policies that include significant amounts of deficit spending.
This apparent willingness to take on additional debt, in pursuit of short-term objectives, leaving a reckoning to some future generation, may complicate the formulation of a functional portfolio strategy.
One likely factor for investor consideration is the risk of higher interest rates for longer than many currently expect
All comments and suggestions are welcome.
Walter J. Kirchberger CFA
