Investing your politics is guaranteed to lose you money

Investing your politics is one of the biggest mistakes individual investors make. If you listened to republican media over the past 8 years you would think the economy was always on the verge of falling apart and Obama was killing American businesses. It was time to get out of the stock market and put all your money under a mattress.

Instead this happened to the US stock market:

2016-11-18_8-32-03

The bottom line is that if you are a republican (or Canadian supporter of them) who invested their politics (stayed out of the market) over the past 8 years you missed out on more than doubling your money.

We now have a new president in the US and he is just as hated by democrats as Obama was hated by republicans. Even before his election there were warnings that the stock market would immediately crash 10%-20% if he was elected and that the world economy will collapse. No such thing happened nor is likely to happen.

Like everyone else I have my own views on Trump as a man and as a political force. However, this blog is not a political blog, it is a blog on personal finance and investing for retirement. Therefore on here I am only concerned with the effect of likely Trump policies on the economy as a whole, and what that means to your investments. The reality is there are good and bad proposals/policies from both sides of the political divide, and many market friendly policies may not be ones you agree with ideologically. You can’t change these policies, they will happen whether you like them or not, so the only thing you can do as an investor is take advantage of them.

Therefore, if you are a democrat, be careful about assuming that everything Trump proposes will be an economic/market disaster. On the other hand, if you are a republican, be careful not to confuse the recent market rally with support for Trump policies. The market always rallies after a presidential election because some uncertainty is lifted. Namely we know who the president will be for at least 4 years and we can start to plan for that.

My next blog post will try to make some predictions as to which Trump policies are likely to pass senate and congress and what effect they will have on various stock markets.


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