In the Gospel of Mark 3:25, Jesus states, "And if a house be divided against itself, that house cannot stand." That is in response to the scribes' claim that "by the prince of the devils casteth he out devils."
"A house divided against itself, cannot stand." Abraham Lincoln, 1858.
I believe this nation cannot endure, permanently, the divide between the ideologies of the radical Right and the radical Left. I do not expect American Democracy to fall — but I do expect it will ultimately cease to be divided.
It will become all one thing or all the other. Either the extremists on the right will succeed in their efforts to purge America of all non-Northern European immigrants, or the extremists on the left will succeed in their efforts to return to the American ideal of "Give me your tired, your poor, your huddled masses yearning to breathe free."
"The wretched refuse of your teeming shore. Send these, the homeless, tempest-tost to me, I lift my lamp beside the golden door!" -Emma Lazarus, November 2, 1883
Pretty heavy stuff for a financial article, I know. But here's why it's relevant and instructive for investors in 2019. Let me state it bluntly:
Politics have no place in the realm of investing.
If the foundation of your outlook for the economy and the stock market is based in a large part on the belief that the current administration will enact policies that will improve the economy and keep this historic bull market going, you are letting politics dictate your investment decisions.
And If you believe that the current administration is going to wreck the economy and the stock market, you are just as misinformed as the optimists.
You can express your political beliefs in many ways, but please don't let them drive your investment decisions. It won't help.
First up is the historical record of the change in the market after the 1st year of a new administration. Do you see any evidence that one party or the other is better for the stock market? I don't.
Next up is the track of the stock market during the first 2 years of a new administration. This comparison is limited to just Obama and Trump because I believe it has the most relevance to where we are today.
Here's the takeaway. As an investor, if you fled the market because you believed that Obama would wreck the economy, you paid a heavy price. If you loaded up on stocks because you believe that Trump will deliver what he promised during the 2016 campaign, you have done well. Just not as well as investors who believed that Obama would deliver.
Personally, I don't care which political party is in control. I'm an independent. I voted for Reagan (twice), GHB once, and GHWB once. But I have never allowed my political leanings to dictate my investment decisions, and neither should you.
Basing your investment strategy on your political beliefs is a dangerous and sometimes harmful way to go. It would be much more productive to leave politics aside and pay attention to independent, unbiased reporting of the actual state of the economy and the stock market.
Leave your political views for the family Thanksgiving dinner. You will probably be boo'd by the rest of your family.