01-22-2021 - Mixing Politics and Investing

Updated: Feb 5

Year-to-Date Strategy Stats as of today:

+4.37% : Turner Quant Advantage (TQA)

+0.59% : Tactical Growth (TG)

+1.94% : Diversified Income (DIS)

+1.06% : Leveraged Index (LI)

+2.53% : S&P 500


Some things just don't mix well... OSU and OU... totally doesn't mix. Oil and water... same thing. Socialist and Capitalist... now, THAT is totally unmixable. Free Speech and Cancel Culture... that's another unmixable combination. Politics and Investing... while you may want to mix these two together, my advice is... don't.


You might think the new administration is the greatest this country has ever seen and we should all be thankful that the prior administration is long gone. You might think just the opposite. And while I would love to proffer an opinion on that particular topic, for the sake of wanting to be the least offensive to any of my clients, I will simply defer.


In reality, there is no reason to try to discern whether this new administration is going to lead our great country into prosperity or ruin. Why not, you may ask? Because it is only a guess. Now, some of my dear readers (and you know who you are) know, deep down in places that they don't talk about at parties, exactly what is going to happen under the current (new?) administration. But, I hope they realize that they would just be guessing.


Only God knows what is going to happen to our country, our way of life, our Constitution, our economy and the stock market. So, unless you have an open, two-way, dialog underway with the Creator, I am going to assume you are only guessing about how great or dismal our economic future will be.


Here is what I do know... (and you know this, too)...


The current trend in the market will continue, exactly until... it doesn't.


So, dear reader, what direction is the current trend of the market? Well, if you are reading my weekly Client Letter (and if you are not, you should be), you know the market is moving rather sharply from lower left to upper right. And, at this writing, the trend is bullish and, as such, I know it will remain bullish until it doesn't.


The market simply loves to give hints about what it 'might' do in the near future. For instance, the market is teasing us with an "overbought" condition that is just screaming for a correction. But, sometimes, the market just teases and doesn't actually follow through. It is entirely possible that a correction is not getting ready to knock on our investment door and/or come barging into our wonderful portfolio, reeking havoc on each and every holding. But, it could. That's why I am using very tight stops on all positions, but I continue to be a buyer of high-quality, up-trending stocks... for now, anyway.


You see... while you may think that politics (good, bad or horrifically bad) will dictate how you should be investing, I submit to you that the market is far more important to follow than the current spate of political machinations. Don't get me wrong... I totally believe that the political winds of change now pulsating in Washington will soon chart an economic course that could result in a massive change in the economy and, by extension, the stock market. I have a strong opinion on whether that change will be good or not, but what I think doesn't matter.


What matters is what the market thinks... and right now, the market is in love with the current administration and is embracing the end of the Keystone Pipe Line and the end of extending the border wall and the reinstatement of the Paris Climate Accord and the end of the 1776 Commission and the end of just about everything possible that is associated with the prior administration. The market seems to love what's going on... or, at the very least, it must believe that what's going on in Washington will not slow down the economic engine of the greatest country in the world. I do hope the market is right... as I am oft to say... "The market is never wrong." Just do not lose sight of the fact that the market can change its mind abruptly and without warning.


My advice, as unwarranted as it is, is to throw a blanket over your TV, keep the radio tuned to the 60's era music, only keep taking the paper for the crossword puzzles, and watch how the market reacts to the news of the day. That's what we try to do... We try to leave emotion at the front door and react to how the market reacts and not try to outthink the market.


If you must talk politics... first of all, be careful about who is listening... do so within the constraints of intelligent, thoughtful discourses. Political opinions can often lead to emotional decision-making and that might negatively impact your investment prowess. Better is to not mix investing and politics... Best is to watch closely how the market handles the news of the day. As long as the market continues to reward us for being long in this market, we will simply say, "Thank you". We always hope for the best, but constantly plan for the worst. We full well expect the market, almost any day, to say, "Enough is enough... it's time to put the brakes on and head south." The market did not change its trend this week, so unless it falls off a cliff over the weekend, the trend is still bullish going into next week and we want to simply stay onboard and reap the benefits. But, you must keep your arms and legs inside the car at all times because an abrupt trend reversal could begin at any moment... probably at the very moment you least expect it. We will not be surprised by a sudden market reversal... we are ready for it... but in the meantime, let's make some more money on this continuing up-trend.

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