Ok. Sometimes I really get an urge to say something. This is especially the case when it comes to politics and the financial markets.
Politics can be emotional. I totally get it. I’m not a fan of the tribalism when it comes to politics. I have opinions, and so do others. Based on our own environment, upbringing and external factors, our opinions can differ. I may not agree with others and others may not agree with me. That’s life.
I won’t get political here so all I’ll say is think again before allowing your political views to force your beliefs on what you think the financial markets will do.
Sometimes politicians make forecasts about the financial markets based on a politician winning or losing an election or who is in power. Politicians have no better idea what the financial markets will do than anyone else. Politicians may make financial market forecasts just to cause excitement or fear, depending on their own political agenda. When it comes to the financial markets, just try to ignore the politicians.
The market won’t crash or rally just because a political party wins or loses the presidency or Congressional elections.
The financial markets move based on the fiscal policies actually implemented, the resulting impact of those policies through the lens of economics, the normal business cycle, the success of individual companies, market technicals, hedging/shorting and the reversals of those positions, adjustments in leverage, monetary policy, perceptions that may or may not become reality, impacts from unknown/unforeseen events and a bunch of other factors.
The equity market didn’t rally right after the election because “the market” loves Trump (and now we’re seeing a pullback). The stock market didn’t crash because Biden was President (core U.S. equity indices actually saw record highs).
If you’re investing in the financial markets, you really should try to understand what actually drives the financial markets.
Sorry for the rant. 😀
Investment Consultant | Portfolio Manager | Wealth Advisor
Eric is a member of the Larson Financial investment committee and provides private wealth management services through Intrua Financial.
A passionate advocate for financial literacy, Eric also develops multimedia educational courses and market insights designed to demystify complex investment concepts for individual investors.
Prior to his current roles, Eric served as a Senior Portfolio Analyst and Vice President at Robert W. Baird, and previously as a Mutual Fund Specialist at U.S. Bancorp Fund Services.
He is a CFA® charterholder and a CERTIFIED FINANCIAL PLANNER™ professional. Eric earned his Master of Business Administration with a specialization in Finance from Marquette University, graduating with honors, and holds a Bachelor of Business Administration from the University of Wisconsin–Madison.