As Hurricane Matthew has passed, attention pivoted directly back to the other erratic and fast-moving storm in our society – the Presidential race.
The debate last night (Sunday) began with two candidates that couldn’t even muster a handshake for one another. And after yet another display of the kind of behavior my wife and I wouldn’t allow from our children at our dinner table, it ended with one of the most enjoyably awkward handshakes I’ve seen in a long time.
I thought to myself – Wouldn’t it be nice if we could return to a time of greater civility in our political discourse? The days when politicians worked together for the common good, made deals in smoke-filled back rooms, and had three-martini lunches with pals from across the aisle.
As Edith Bunker would say, “Those were the days.”
Last Tuesday night’s Vice Presidential debate was less a debate on policy and more an insult fest that even deteriorated into a dispute over which side has been more insulting. Governor Mike Pence accused the Democrats of running a campaign based on an “avalanche of insults.” Senator Tim Kaine scolded Governor Pence for “defend(ing) the insult-driven campaign that Donald Trump has run.” And those were among the nicer things that they said to one another.
The entire affair (and this election cycle in totality) is enough to leave us all longing for the refined times of yore. The only problem is that those days never existed. A lack of civility in our political discourse is as American as apple pie.
- Consider the election of 1796 with Vice President John Adams pitted against another Founding Father, Thomas Jefferson, in a race to succeed George Washington as President. John Adams said, “If you elect Thomas Jefferson, murder, robbery, rape, incest, and adultery will be practiced throughout the land.” Thomas Jefferson replied, “John Adams is a hideous hermaphroditical character with neither the force nor firmness of a man, nor the gentleness and sensibility of a woman.” And we thought no stamina was an insult!
- Eight years later in 1804, Aaron Burr, the sitting Vice President of the United States shot and killed Alexander Hamilton, the former Secretary of the Treasury in a duel. As bad as things have gotten, we have not seen Joe Biden challenge Timothy Geithner or Hank Paulson or Lawrence Summers or any other former Treasury Secretary to a duel.
- In 1861, Abraham Lincoln took the oath of office with the nation on the brink of a civil war. He famously implored the nation to embrace “the better angels of our nature.” Lincoln’s call for unity at his first inaugural address took place two weeks after Jefferson Davis had been inaugurated as the President of the Confederacy. There are many more modern day examples as well, but these are some of my favorites and they are enough to make the simple point. Politics has been and always will be shamefully ugly.
We are (mercifully) less than a month away from the election. Political attacks will be heated. Our patience as a nation will be tested. And close to half of the electorate will be disappointed with the outcome. Actually, I believe it will be many more this time around with the ‘winners’ largely less than pleased with their victor.
With all this, investors should sit back and watch the spectacle, knowing full well that the lack of political civility is as old as the country itself. The peaceful transfer of power from the Obama-Biden administration to the next administration will soon be completed. The nation will endure… as it always has.
So what about the investment markets, then?
Former Vice President Dan Quayle once declared, “This election is about who’s going to be the next President of the United States!” Quayle’s stating of the obvious was mocked by the nation’s punditry. But from an investors’ perspective, the gaffe might be more brilliant than any of us originally realized.
There is a cottage industry built on advising investors on how different asset classes, sectors, and industries will perform based upon which party controls the executive branch of government. This time is no different. If Hillary wins we are told to sell the pharmaceutical companies and buy the renewable energy companies. If Trump wins then we are to short the Mexican peso and buy the defense companies.
Does anyone ever go back and look at the predictions?
For example, in 2008, the prevailing view was that the McCain-Palin “drill baby, drill” ticket was good for big oil, while Obama-Biden were going to decimate the fossil fuel industry.
Obama won and advanced techniques for oil extraction drove production to a 45-year high. Any assumption a Democratic administration would have been unfriendly to the petroleum industry proved irrelevant—because of economic forces and private sector ingenuity at work during the president’s time in office.
Speaking of private sector ingenuity, here’s an abridged list of products or services brought to the market over the Obama years (past eight years): cloud computing, iPad, Fitbit, 3D printing, Instagram, Uber, the world’s first full face transplant, and the world’s first bionic eye implant, to name a few.
This is not to say that there aren’t important real-world implications to this year’s election and clear distinctions between the two candidates. There are, and we should vote according to our own personal views.
But how much will the outcome ultimately matter to investors?
As I’ve said before, history suggests that it won’t. There are far more important factors impacting both the economy and the stock market than which political party happens to occupy 1600 Pennsylvania Avenue.
Investors considering waiting until the man or woman from their preferred political party occupies the White House should recognize how that would have worked out in the past:
- A $10,000 investment held in the Dow Jones from 1897 to 2014 would now be worth $4.3 million.
- Investing only when your preferred party is in the White House and selling whenever the other party is, would be worth roughly $4 million less! 1
Well-positioned, well-led companies will create investment value regardless of who sits in the White House.
Quayle is right. This election is about who’s going to be the next President of the United States.
I’m far more interested in the business leaders who are going to harness the powers of artificial intelligence and robotics, create the next generation of life sciences that will cure our most debilitating diseases, continue to evolve the nation’s energy sources, and develop new technologies and new industries that aren’t even yet on our radar.
Entrepreneurs and hard workers are very likely to help the world get a whole lot better, irrespective of who wins the election……..again.
The takeaways:
- Despite the horrible tone of things, what we are enduring now really is just politics as usual; even though most of our necks are probably sore from all of our head shaking.
- It has been historically proven that investing with a political bent leads to lackluster results. Retirements and legacies are funded by rational and disciplined actions of grounded investors, not the rhetoric of candidates and Presidents.
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