Economy Trumps Politics

August 14, 2010

I’m sure you’ve heard the same thing from clients as I have. They’re jaundiced about the economy and the markets because of their disdain for our current political environment (no argument from me). Question is, how much should today’s political headlines color your long term investment planning? Well, there are never guarantees but JP Morgan presented a view in its third quarter Market Insights Quarterly Perspectives that I found persuasive and worth sharing.

In the long run, economic forces are stronger than political ones
Almost like flipping a coin, political swings tend to balance out over time. But while the nation may be divided in its political views, we all tend to agree on achieving economic success. Americans want to win. We work too hard, spend too much, we innovate and, ultimately, we get ahead. As a result, the economy tends to grow over time, not revert to the mean.”

“In the long-term battle between politics and the economy, the economy is likely to prevail.”

“It’s important that long-term investors not let the emotions of politics supersede investment logic.”

I also plan on sharing it with my concerned clients.

%d bloggers like this: