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October 2019 Client Letter - Politics and Investing

Hello everyone,

I hope that you enjoyed a restful Thanksgiving weekend with friends and family! 

Markets to date in 2019

The markets in 2019 so far have produced a nice rebound from the turmoil in late 2018.  A quick snapshot below:


Although equity markets continue pushing to record highs this year, it is clear that investors around the world are hanging on every word (or tweet) that President Donald Trump sends out.  In speaking with a number of you, I know that this can be concerning.  Wondering about what will come from the President next and worrying about what that will mean for your retirement savings must be unsettling.

Don't Let Politics Influence your Investing

Although it can be difficult, it is important to remember that no president can force good businesses to lose money for any extended period of time.  In the face of trade wars, tariffs, or punitive taxation, rational business owners will simply preserve their capital and wait for a better opportunity to deploy it in times or markets that are more favorable. 

Or at least, that has been the story over the past 2 centuries.  Over decades and decades, the world has seen good leaders and bad leaders.  We have seen world wars and financial crises.  The constant has been that good and rational businesses innovate and find opportunities in free markets to sell their products and services to willing buyers.  Even though in the short term the movement of stock prices may not always be rational, the value of good business as a group over the long term tend to be quite positive on the whole.

As a retirement income planner, I try to think of things in 30 year time clips.  So, the when faced with a question about Trump's latest tweet - stop and ask yourself "how much of an impact will this have over the next 30 years of my investment lifetime?".  Historically, the answer has been "not much".  

Of course, you can always call me and we can talk through it together.  

As always, thank you for your trust.

Sincerely,

Mark


Photo by Chris Lawton on Unsplash

The information in this material is not intended as investment, tax, or legal advice.  Please consult your advisor or tax professionals.