Fair and Balanced

Do politics make us stupid?

Paul Krugman is a good writer. He often pens trenchant, insightful commentary. But I noticed something when President Obama was elected: he went from formulating well-reasoned arguments to shouting, from his op-ed pages, that the country is going to blazes and it’s all the Republicans’ fault.

Now, I love Krugman’s writing. He can turn a phrase with the best of them. And when he gets “wonky,” I’m in heaven. But much of the time these days he writes like a … hack. It’s as if the fact that his team is in control in Washington makes part of his brain turn off. It’s the same on both sides of the aisle. When we start to talk or write in good vs. evil terms, it seems that our IQs drop 10-20 points.

This may be because when we identify ourselves with one political party or another, we devote lots of mental energy defending our team’s practices, rather than articulating its principles. I’m not saying that political parties are bad; on the contrary, the vigorous competition that close elections engenders is a good thing. It roots out corruption and keeps politicians on their toes. But the deliberate ignorance that people erect around their own tribe’s sacred cows is dangerous, especially when it comes to investing.

Because money knows no politics. A stock isn’t more likely to go up or down based on whether the CEO is a Democrat or a Republican. Was Steve Jobs an Obama supporter? It doesn’t matter: Apple’s stock has soared because they created several new products that have revolutionized the way live and captured the marketplace.

Willful blindness dulls us, but competition sharpens us; but. Politics may make us stupid, but the market demands every ounce of intelligence we have.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-09T16:08:13+00:00 April 10th, 2012|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
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