You can’t let emotions interfere with important investment decisions, and few topics these days arouse such spirited passions as politics heading into the 2020 election. Chief Investment Officer Jim Lowell discussed investing amid political unknowns in our recent quarterly webinar*: 2020 Conflicts—Impeachment, Tariffs & Global Dysfunction.
Please enjoy the excerpt below and click here for the full webinar replay to hear more.
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Jim Lowell: Well, we have a special report here at Adviser Investments (if you haven’t seen it, please do give us a call, we can point you in the right direction) that talks about how you should focus on market and economic cycles, not election cycles. So the reality is, whether or not a Republican or Democrat is in office, the fundamentals will drive the market fairly quickly to their higher or lower bars.
Jim Lowell: Right now, speaking of low bars, obviously, DC politics is continuing to run amok. The impeachment process, if it plays out the way the market is priced in, which is effectively a divide that enables President Trump to remain as president, is likely to be viewed I think by most investors as the best probable outcome. [Note that this webinar was recorded ahead of President Trump’s February 5th acquittal.] I’m not saying it’s going to be viewed by most people in that way. Political persuasions aside though, our job here is to take the politics out of the portfolio.
Jim Lowell: If it turns out that there is some sort of new and truly damning evidence against the president that would swing the Senate to vote for impeachment, that would be a very disruptive moment for the market and for the country. But again, it would be a moment in the market that would be in recovery or on a recovery track in fairly short order, at least if past is prologue.
Jim Lowell: Ultimately while we take politics out of the portfolio in terms of emotions, we certainly pay a lot of attention to any sort of policy implications. So almost remarkably, we really haven’t talked at all about tariffs and trades and U.S.-China [negotiations], which was pretty much only what was talked about last year. But with “phase one,” an optics deal that we thought we would get effectively done, that moves at least for the moment to the back burner. Politics again, Brexit, we know by the end of the month that is going to transpire. Nobody knows what that will mean for the U.K., the EU, the global markets; just a lot of conjecture.
Jim Lowell: So ultimately every day the political data comes in, the headlines are there, but we stay focused on earnings, interest rates and economic data.
*Webinar recorded after the market closed on January 23, 2020.
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