The sun will rise again.
Sunrise from space. Source: NASA
That’s what I thought this morning when I read the headlines. Lots of folks – both left and right – are freaking out. I can’t comment on social or political issues – they’re outside of my zone. But I do have one suggestion for investors: stay calm.
When President Obama was elected a lot of people on the right expected that higher taxes and greater regulation would damage the economy. And we saw higher taxes and greater regulation. But the economy still grew. Yes, Trump is anti-trade and anti-immigration, both of which benefit the economy. That’s why almost no economists endorsed him. But the Office of the President is bigger than the person who occupies it. Trump will be constrained by Congress and the Courts. We’re still a narrowly divided nation. Hey, maybe we’ll think seriously now about limiting executive power, the way the Constitution intends.
Source: NY Times
What matters most to markets is company earnings and their long-term growth. Wars, revolutions, cultural shifts, and technological changes have a much bigger impact than politics. Regardless of your political views, life will go on. Governments intervene in their economies. Governments go to war. Governments make policy errors. If you’re a long-term investor, those errors are typically corrected in less than a generation.
We’ve gone through invasion, civil war, depression, and terrorism. The Republic will survive. And I expect the sky to still be blue.
Douglas R. Tengdin, CFA
Chief Investment Officer