The Election And Your Investments

Some readers have asked me to comment on the upcoming elections, the possible outcome and the effect on various investments. I try to stay away from commenting on politics in general, since I despise the way most positions go about their business. Empty promises and total lack of integrity would be some of the reasons among many others.

However, yesterday Random Roger posted a nice piece about his take on the elections, and I must admit that his view pretty much resembles mine. Here are some highlights:

I’m a Libertarian so I don’t really care for either candidate (have not been of any candidate for quite a long time). They both have flaws galore and they probably each have positives too.

Part of my frustration (not unique) is the fact that very, very few of the “promises” made can actually happen. Candidates often promise things that cannot be passed through congress. They may (or may not) believe in the value of certain policies but still many of them never have a shot in congress and they know this going in.

I find the pandering to be nauseating. I find myself perplexed as some of the ideas that come from candidates that seem to ignore common sense. Regardless of how we got here, the economy stinks. Raising taxes in a lousy economy is a bad idea. Raising them in a mid 1990s economy is far less damaging.

I find there is dishonesty in much of what is said, there is no easy way to find really unbiased analysis of what is being proposed. As an example republicans are critical of raising the capital gains tax to which any dem they can put on TV says they will be below what they were under Ronald Reagan. I’m sure I am being overly critical but I find answering the question of will he raise taxes by saying they will be lower than… to be dishonest at the core.

The drilling in ANWR is another absurd debate. It won’t add oil for ten years. If they had started ten years ago we’d have it now. If they started eight years ago prices now might be less with the realization than ANWR would start producing in two years. The land in question is a massive, barren tundra. If you have been reading this site for any length of time you know what sort of animal person I am. With that said, does it make any sense whatsoever that the wildlife that would be displaced or otherwise harmed by commencing drilling ops on a speck of that massive barren tundra is more important than the American economy?

No matter what the outcome of the elections, there will be some effect on Wall Street. Historically, there have been sharp rallies and declines no matter which party got top billing. As we’re heading into the final stretch, market trends (especially in sectors) will develop and point to the direction of potential investment opportunities. Establishing any positions now based on hypothetical assumptions is a risk I would not want to take.

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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