I like this little article. Not too relevant. BUT......I like the basic view to NOT let your personal politics SCREW UP your investing: Investors be warned: Your political beliefs can have a negative effect on your returns https://www.washingtonexaminer.com/...fs-can-have-a-negative-affect-on-your-returns (BOLD is my opinion OR what I consider important content) Political opinions of any kind can seriously reduce your investment returns. Anti-free market sentiment and nationalism are among the most harmful biases, though they are by no means the only ones. In countries where large portions of the population are staunchly opposed to free market capitalism, and harbor strong prejudices against the rich, levels of stock market investment are far lower than in countries where people feel more positive toward free market policies and wealth. This, of course, has a negative affect on investment returns. German investors are frequently criticized for the fact that their investment portfolios underweigh listed stocks, with equities accounting for a far smaller proportion of total financial assets (5.6%) than in the United States (22%) but slightly higher than in France (5.2%). The numbers are correct, but according to the Allianz Global Wealth Report 2020, they don't tell the whole story. German households invested 5.8% of fresh savings over the last six years in the stock market, compared to just 1% over the last three years in France. In each of these countries, there would certainly seem to be a link between investment behavior and attitudes toward free market capitalism and wealth. The Edelman Trust Barometer, which surveyed 34,000 people in 28 countries, reveals just how widespread distrust of the free market and of the superrich is around the world. Among the survey’s items, the statement that “capitalism as it exists today does more harm than good in the world,” attracted more support in France (69%) than in any other developed country. In Germany, 55% of the survey’s respondents agreed. In contrast, the 47% who agreed in the United States is 22 percentage points lower than France. These figures agree with the findings of my own study, The Rich in Public Opinion, which showed that social envy is significantly higher in France than it is in the U.S. France registered a social envy coefficient of 1.21, whereas the social envy coefficient in the U.S. is only 0.42. In fact, the coefficient was higher in France than in any other country in my study. It is obvious that people who have extremely negative attitudes toward free market policies and the rich are not likely to think highly of stocks and the stock market. It is clear that an anti-free market bias can lead to unwise investment decisions. The same can also be said of nationalism. The French are not only socially envious, they are also not all that astute when it comes to diversifying their investment portfolios between domestic and foreign shares. In fact, the small percentage of French investors who actually invest in listed stocks make one of the biggest mistakes any investor can ever make. French investors suffer from a strong “home bias,” as the Allianz study shows. Home bias is the tendency for investors to invest in stocks from companies in their own countries, a longstanding phenomenon that scientists have observed in many countries around the world. French investors hold only 15% of foreign shares in their stock portfolios, in contrast to German investors who own almost four times as many at 54%. Of course, investors might get lucky and see domestic shares outperform a globally diversified portfolio in any given year. However, long-term studies show that investors who are subject to “home bias” have significant yield disadvantages compared to those who are not. The French are more optimistic about their own nation than Germans are, but when it comes to investing, a strong sense of loyalty to one’s own country can do serious damage. I have been interested in politics all my life and have very strong political opinions but, when it comes to investment decisions, I put my personal opinions to one side. For example, my views align with a lot of libertarian positions and I am a great admirer of the books of Ludwig von Mises and Friedrich August von Hayek. However, I often find myself disagreeing with people who otherwise share my political views but make the mistake of basing their investment strategies on those views. They raise a series of rational objections to paper money (“fiat money”), but then conclude that this means they should invest their money in crypto "currencies" such as Bitcoin. I use quotation marks around “currencies” here because they are not really currencies at all. There are lots of reasons I don’t like Bitcoin, despite the fact that speculators who entered the market at the right time earned great returns. Nevertheless, I am not a speculator but an investor. My investments are completely apolitical, which has yielded better results for my returns. My advice, therefore, is this: No matter what political convictions you hold, forget them all when it comes to investing money. Investors who care about the environment should nevertheless steer clear of “green” investments and investors who love their own countries should ignore any patriotic stirrings when they are deciding where to invest. Investors who are put off by free market capitalism should bite the bullet and invest in stocks, while libertarians should nonetheless give Bitcoin a wide berth. You could ignore my advice but only if you are prepared to accept a lower rate of return. MY COMMENT AGREE. POLITICS and other social "STUFF" has NO place in investing. I am LUCKY to live and be able to invest in the leader of the WORLD when it comes to DOMINANT BUSINESSES. SO.......I invest in American companies. If I lived anywhere else in the world I would ALSO invest in American companies..........if I could. I want the cream of the crop.......WORLDWIDE. As to "social" and other BS........I invest to make MONEY..........and ONLY........to make money. Not to change the world or punish those that I dont agree with........regardless of my personal views. On a NEGATIVE NOTE........I do foresee the day coming quickly when the.......SOCIAL ENVY.......and STUPIDITY of the American people WILL put us in the category of countries that are ANTI market capitalism. Lets hope that younger people will.......wake up and get more realistic as they age. Lets ALSO hope that all the people coming here from INDIA and other countries will have enough awareness of........other social and government systems........that they have a positive impact on the attitudes of SPOILED American anti-capitalists.
Unless politics directly effect your investments. Tax policy could effect bottom line profits. Environmental regulations could effect the bottom line. If you hold REIT in nursing homes, or prisons, a change in government policy may effect earnings. Political party politics regarding defense spending will shift the balance sheet of defense companies. Interest rates, The Fed....banks making a profit..... Has nothing to do with personal sentiment. Which political party is in The White House is still a consideration when my money is invested. Even if I am invested in Coca Cola. What if a nationwide soda tax passes?
Those young people will shift the world. Good or bad. Change is progress. There's still going to be money to be made. When, not if, a green new deal comes to fruition; there will be money in "green" business. Energy, utilities...... Will shift from burning fossil fuel to new technologies. Even when we are all driving electric cars, someone has to produce, transmit, distribute, and profit. We're not going into an environmentally friendly, nonprofit future.
Great comment on defence investing. This is a very interesting topic of discussion. Defence investing is like investing in tobacco in the 1970s. You know it will be less profitable over time but, right now it is so profitable that it's still worth it and it will never go away completely. "Defence" is slowly transitioning into IT spending with a bit lower emphasis on physical defence.
On a POSITIVE NOTE........today was GREAT. A very nice ALL GREEN day in the old accounts. PLUS a nice......little.......beat of the SP500 by .38% Having been gone a few days......I must say: SP500 year to date +5.5% DOW year to date -1.37% It was on February 12, 2020........ONLY........7 months ago that we hit the ALL TIME HIGH on the Dow........29,551. A very interesting 7 months. At the moment we are only 4.9% away from the all time High of the Dow. Not too bad considering all that has occurred. The........good thing is........we are only a month from the election and once it happens we will be in the final stages of whatever DISASTER is going to happen. The............bad thing is........we are only a month from the election and once it happens we will be in the final stages of whatever DISASTER is going to happen. YES.......but......at least we will soon......perhaps 3-6 months......be done with the election DRAMA and will be able to move on to normal life as it is these days.
As to the comments of A55. I dont agree in the slightest. Which is fine........we can do so in this thread. "PERSONALLY".............and I mean that.......I dont care what anyone else does.......they have to follow their own view and do what they need to do with their own money........BUT....I am a long term investor. I am NOT going to move in and out of investments based on some election that.......might.....have an impact for a couple of years maximum. I am NOT going to invest based on short to medium term "guesses" as to what some politicians will or will not do. THIS is exactly why I try to invest in the ABSOLUTE cream of the crop. If I do a good job doing that, it is IRRELEVANT how or what the politicians do in the short to medium term. Trying to invest based on these sorts of factors is just going to guarantee sub-par returns. NOW.......if you are a medium term trader.........1-2 years......have at it. Taxes, spending, budget cuts, blah, blah, blah........who cares. It is NOT going to impact what I invest in. I ALSO believe it is impossible to anticipate and invest according to some preconceived political event. Things NEVER happen the way we GUESS they are going to happen..........stuff happens and screws it up. Or we misread the situation. Or some black swan event comes up, etc, etc, etc. In my opinion this is simply another form of investor GUESSWORK that is doomed to fail. I do not invest based on anticipation of some future event. I invest based on the superiority of the businesses that I invest in. AND.......I invest for the LONG TERM.....10, 15, 20, 25 years. One mark of a DOMINANT, ICONIC PRODUCT, WORLD WIDE MARKETING, American company is the fact that it does not matter who is in power. These sorts of companies tend to stay on top regardless.....at least......over the long term.
I share your views on the relevance of macro factors, W. Perhaps this is an artefact of being a long term investor. Anything we hold is going to be exposed to all kinds of positive and negative forces that are impossible to predict. For a trader, macro influences might be of far more interest. Of course, I wouldn't know. That's not my game. I just offer it as a potential factor in the different points of view.
HERE is my actual portfolio. If I talk about my Portfolio Model or my accounts this is what I am talking about. I post this every so often for transparency and context. As the hypothetical......"they" say............."money is the mothers milk of politics"......and.....the companies I invest in have DOMINANT political power (money, lobbyists, donations, mega-rich elite owners and management, etc, etc) in addition to business power. As the ones that CRAVE power and money the politicians BOW DOWN to these companies. SO......over the long term.....to me......politics is IRRELEVANT. "HERE is a repeat of the portfolio model.......as usual: I am once again posting my PORTFOLIO MODEL. My initial criteria to start the process to consider a business are.......BIG CAP, AMERICAN, DIVIDEND PAYING, GREAT MANAGEMENT, ICONIC PRODUCT, WORLD WIDE LEADER IN THEIR FIELD, LONG TERM HORIZON, etc, etc, etc. PORTFOLIO MODEL "Here is my "PORTFOLIO MODEL" for all accounts managed which is the basis for MUCH of my discussion in this thread. I am re-posting this since I often talk in this thread about my portfolio model. My custom in the past on this sort of thread was to re-post my portfolio model every once in a while since I will tend to talk about it once in a while. I "manage" six portfolios for various family including a trust. ALL are set up in this fashion. If I was starting this portfolio today, lets say with $200,000. I would put half the money into the stock side of the portfolio, with an equal amount going into each stock. The other half of the money would go into the fund side of the portfolio, with an equal amount going into each fund. As is my long time custom, I would than let the portfolio run as it wished with NO re-balancing, in other words, I would let the winners run. Over the LONG TERM of investing in this style (at least in my actual portfolios), the stock side seems to reach and settle in at about 55% of the total portfolio and the fund side at about 45% of the total portfolio over time. That is a GOOD THING since it tells me that my stock picks are generally beating the funds over the longer term. AND....since the funds in the account generally meet or beat the SP500, that is a VERY good thing. As mentioned in a post in this thread, I include the funds in the portfolio as a counter-balance to my investing BIAS and stock picking BIAS and to add a top active management fund that often beats the SP500 (Fidelity Contra Fund) and a SP500 Index Fund to get broad exposure to the best 500 companies in AMERICAN business and economy. The funds also give me broad diversification as a counter-balance to my very concentrated 10 stock portfolio. At the same time the funds double and triple up on my individual stock holdings............that I consider the BEST individual businesses in the WORLD. STOCKS: Alphabet Inc Amazon Apple Costco Home Depot Honeywell Johnson & Johnson Nike Microsoft Proctor & Gamble Tesla Nvidia Snow (100 shares, a rare, long term, speculative holding) MUTUAL FUNDS: SP500 Index Fund Fidelity Contra Fund CAUTION: This is a moderate aggressive to aggressive portfolio on the stock side with the small concentration of stocks and the mix of stocks that I hold and with the concentration of big name tech stocks. Especially for my age group. (70). So for anyone considering this sort of portfolio, be careful and consider your risk tolerance and where you are in your life and financial needs. I am able to do this sort of portfolio since my stock market account is NOT needed for my retirement income AND I have a fairly HIGH RISK TOLERANCE. In addition I am a fully invested, all the time, LONG TERM investor. (LONG TERM meaning many years, 5, 10, 20, years or more)" MY COMMENT This portfolio is HIGHLY CONCENTRATED on the big cap side of things. OBVIOUSLY between the funds and my twelve stock holdings there is MUCH doubling and tripling up on the stocks. THAT is INTENTIONAL. I strongly subscribe to the view of Buffett and some others that TOO MUCH diversification kills returns. I do NOT believe in the current diversification FAD that most people seem to now follow.......or think they are following. I DO NOT do bonds and think the current level of bonds held by younger investors.....those under age 50.....is extremely foolish.I DO NOT do market timing or Technical Analysis."
I respect that. We can't agree on everything. We are in agreement with picking the same companies. Thumbs up. No losers. If you don't mind me asking, how long ago did you get into tech? Was there anything you previously had, then dropped in favor of tech?
These days, tech is defense, and defense is tech. Everything except the combat knife is tech. Even the uniforms are embedded with infrared and RFID. Even firearms are being developed with computer technology. Government will still buy missiles, fighters, bombers, submarines, drones, and tanks. All of those things will be more high tech and computerized. Battles of the future may be fought with remote operated drones & robots, with the operators controlling the devices from 1,000s of miles away. I am excited about electric, Full Self Driving tanks from Tesla. And attack pigs implanted with brain computers.
My FIRST tech stock was Microsoft in 1990/1991. I bought 1000 shares........as usual.......all in all at once. Into the 1990's I owned many big cap tech stocks, Cisco, Intel, AMD, Dell, Broadcom, Motorola, etc, etc. At this point I can NOT remember details of what stocks and I do NOT keep records or statements that far back. In fact with good brokerage record-keeping now, ALL I keep is the latest statement for each account. I have owned various tech stocks since the 1990's up to now. My investing focus has never been "TECH".......it has been BIG CAP market leaders........in the old days.......often the conglomerates and big consumer companies. My portfolio has evolved over the years to where it is now. LAST I looked the markets were doing ok today.......but......not the tech stocks. As usual the markets are OBSESSING over the FED and the STIMULUS talks. EXTREME short term........stuff.
Delaying the stimulus talks until after the election. Who is that supposed to help? GOP needs it to keep the house of cards going for the election. Democrats need it for PR and to prevent apathy going into the election. Main street needs it for, you know, not starving. Wall St. needs it to keep the party going until the big "cash out". What am I missing here?
YEAH.......some are saying it is the collapse of the stimulus talks. BUT......I am thinking......death of Eddie Van Halen?
There is ABSOLUTELY no reason to just agree to some insanely non-relevant stimulus program due to the election. It is a waste of money to just throw money around in a way that will not help. People need to.......go back to work. The incentive to not work that was put in place at the beginning.............CRAZY. My stimulus plan.......the governors and mayors of the failing cities need to quit screwing around and open up their cities and states.
That's nice and all, but there are millions people who are about to be thrown onto the streets if the gov't does not do their job. Not their fault their job left and will never come back. Just think if instead of spending trillions on companies who blew their surplus on buybacks, the gov't gave it to the small businesses who did what they should? The average person would be doing better right now. As far as going back to work is concerned, I agree, but if it is not done right, all of this will be for nothing come winter.
There is no shortage of jobs where I live. AND....most people that I see with college degrees are NOT out of work.......at least in my area. The odds of dying from this virus are slim........for most people under age 65. I guess we have a BIG difference of opinion as to........what is the job of government. As to the markets.......RED of course for me today. Nvdia, snowflake, and PG my only GREEN stocks today. Got beat by the SP500 by .08%.
Here’s the only thing you need to know about covid: If Covid is “not so bad” - OPEN THE EFF UP!! If Covid is the WORST PLAGUE TO HIT EARTH - well then... considering we only had 200k deaths... guess our president did a great job after all!!!
