Does Today's Election Outcome Matter to our Economic Future and How We Should Invest? ... In a Word, NO!

There's been a great deal of noise circulating these past several months about the election and what its outcome will mean to the financial future of America. Over the next several years, not much, if anything, I would argue. Progressivism hasn't done us in yet, and it won't stop We the People in the future either.

It's our country and our freedom, and let's always remember that. We can always change what we don't like. There will be more elections down the road. (Thankfully, however, there won't be one real soon after today's. In other words, I'm ready for this year's silliness oriented political circus to end. How about you?)

The reason for my confidence about America's future is simple and straightforward. While we all have our individual preferences for a larger or smaller government role, the political debate is really centered around the CENTER --- the center left Democrats, the center right Republicans and the Independents.

No matter what the election year rhetoric may be, the extremists on both sides won't ever determine how we're governed. In fact, Depublicans and Remocrats pretty much govern from the center. Look at Romney's health care plan in Massachusetts or ObamaCare, as examples. While the election year hype is loud, the reality is that we'll take care of the oldsters through Social Security, Medicaid and Medicare, and that we'll continue to provide for the national defense and help the poor and unemployed while maintaining our public schools and colleges as well.

But one thing will change when the morning of November 7 arrives. The next presidential election will be four years off, and that's a good thing. No more silliness in presidential politics for a few more years. That will be great.

But what about investing differently depending on who wins the presidency? My advice to long term investors is to forgetaboutit. Why the election doesn't matter is subtitled 'The lessons of elections over 150 years:

"A lot is riding on the upcoming presidential election — just not your portfolio over the short term. . . .

The implication: You should not be altering your November trading strategies according to who wins on Nov. 6.

Consider first all bull and bear markets since 1900. . . . How many of the 35 bull markets on the firm’s list began or ended in presidential election months?

The answer? Virtually none of them. . . .

 If not the stock market itself, how about the economy? . . . Just one of the 33 recessions since the mid-1800s began in November of a presidential election year: The one that, according to NBER, began in November 1948.

On both counts, there is little, if any, historical support for the notion that the outcome of this month’s presidential election will, in itself, bring about a change in the economy or the market’s major trend.

Though these conclusions seem hard to square with the hype coming out of the presidential campaigns, they nevertheless seem plausible — once we stop to think about it. That’s because, that hype notwithstanding, both of the major political parties end up managing the economy in profoundly similar fashions.

This, after all, is the longstanding critique of the major political parties that comes from the Libertarian party. Libertarians argue that there is precious little ideological difference between the economic policies of the Democratic and Republican parties. Just take the individuals that President Obama four years ago chose to manage the economy, for example. They were in large part indistinguishable — both in terms of policy prescriptions and sometimes even in identity — from the ones employed by former President Bush. . . .

The bottom line? Be careful not to let your politically partisan beliefs have undue influence over your short-term trading strategies. To the extent that the outcome of the election has impact on the economy and the stock market, it’s likely to be seen over many years — and have little impact on the market over the next few weeks."

Summing Up

I would add that our self governing society is also a self correcting society.

When we get carried away and go too far in one direction, the pendulum inevitably brings us back toward the center. Maybe not as fast as some of us would prefer, but it will happen.

And We the People as a whole never have and never will stray too far from the center.

That's what makes us a great nation. The best in the world, for that matter.

Let's never forget that. To paraphrase a wonderfully short piece of advice given by Winston Churchill, "Never give up. Never, never, never."

And so we won't.

Thanks. Bob.