November 06, 2012

My Fellow Americans

Credit: the photoholic
My Fellow Americans:

By this time tomorrow, President Barack Obama or Governor Mitt Romney will be our next president-elect. By this time tomorrow, television channel 2, channel 46, and channel 202 will either be rejoicing or mourning. Channel 360 will have launched fireworks across its scrolling bottom line, or its pundits will already be discussing the year 2016. By this time tomorrow, close to 50% of the country will be happy and 50% of the country will be disappointed, but we need to keep this in perspective.

Regardless, the campaign or “easy” part will be over, and our elected leaders will face the same challenges our country did this morning. Our national debt will still be more than $16,000,000,000,000, our annual budget (which Congress hasn’t officially passed in more than 3 years) still isn’t sustainable, our unemployment rate is still high, our consumer sentiment is still pretty low, and our individual and corporate tax laws need substantial reform. In order to save you from additional political fatigue, I’m not even going to begin listing the serious national security and social issues our country is facing.

However, even if the candidate you preferred does not win, it’s important to take comfort knowing that our nation still remains one of the strongest in the world. Other countries still flock to our economy and currency for stability and opportunity, we have the best armed forces, and in the words of Winston Churchill, “Americans can always be counted on to do the right thing after they have exhausted all other possibilities.” We can only hope that our nation and its leaders prove the late prime minister correct going forward.

I’m expressing my perspective because my friends, family, and clients have driven me to be neither a Democrat nor a Republican. I simply believe both parties have done America wrong, and it’s going to take both parties to set America right. While I acknowledge many of my values and beliefs are fairly ingrained, in this historically divided political climate, I often find myself trying to pull supporters of the far left to the right and pull supporters of the far right to the left. The Democratic Party has better plans and ideas on some issues, and the Republican Party has better plans and ideas on others. It’s important to acknowledge that there is no way that 150 million other Americans have a “stupid” opinion just because it is different than your own. In my opinion, our government and we, the people, should recognize the need for swift action from our government on many issues and start walking towards each other in a middle-of-the-road, compromising kind of way. Since when did it become more important to win red versus blue and not win as the red, white, and blue?

So what does politics have to do with personal finance? More than it should. Many of those same friends, family members, and clients who have driven me to try to see things from the middle have slowly been allowing their political views to seep into their investment philosophy. As a financial planner who is trying to be a trusted advisor, I cannot let you do that. It’s at least my duty to try to help you differentiate your politics from your portfolio.

What impact should the immediate election results have on your long-term investment strategy? Probably not much. Look, neither I, nor anyone else, know what the markets are going to do in the short term, but I do know that over the long term, they will rise. I don’t know which sector will perform the best in the first quarter of 2013 under a Romney or Obama administration, but I do know that your current interest rate on your cash accounts or Treasury Securities isn’t going to win versus inflation. I don’t know which candidate is going to hit the magic 270 in the Electoral College tonight, but I do know that the intrinsic values of well established companies like Home Depot and Coca-Cola are not going to diminish that much regardless of the election outcome.

If by tomorrow you are not sure you can emotionally or physically get through the next four years based on how your investments are allocated, then maybe you should do something. If you feel this way though, chances are you probably should have started doing something differently a long time ago, not just because of this election. If the election results give you an impulse to change your portfolio to 100% equities or 100% cash and gold, please step away from the televisions, radios, and social media sites, go to sleep, and call your financial advisor in the morning after you have had some time to cool down and differentiate your politics from your portfolio.

I stay away from politics on 2MuchCents as much as I can, but I felt like this needed to be said. Next time we’ll also be looking at some investing tips, but in terms of fantasy football.

Go vote.


1 comment:

  1. Great post, Tom! I feel like you are talking to me! The best advice right now, at least for me, is "In God we trust!"