With yesterday’s inauguration of Joe Biden, it seems the perfect time to consider the role that politics may play in our investments. Over the past weeks and months, politics has been a hot topic. Undoubtedly, we can expect the economy to change and the markets to react as policies and priorities shift. Many are worried about the outcome of the election—and many others are excited. So, with all of the different emotions at play, how do we think about politics as we make our investment decisions?
The Choice Facing Financial Advisors
As Commonwealth’s chief investment officer, I serve a wide range of advisors and clients. They all have political opinions, and I may fundamentally disagree with many of them (half?) on very important issues. How can I handle this disconnect?
As I see it, I have a choice. I can take public positions that might feel good but will both alienate and ill serve a substantial portion of my community, while convincing no one. Or, I can focus on communicating what I both know about and have been tasked to do, in order to help people, as investors, navigate the current turmoil.
All financial advisors face the same decision. For all of us, no matter what our opinions, stating them can make us less effective for a substantial portion of our clients. And we can’t sidestep the issue by saying we have no opinions, because of course we do. What to do?
The way I have tried to deal with it is by explicitly separating the two roles I have: as a citizen (where I have very strong opinions) and as an economist and investment advisor (where all that matters is the data). By decoupling the two, I acknowledge I have my own opinions, but I try to make them less relevant to the discussions we are having.
I might say something like this. “As a citizen, I certainly have my own opinions, which may (or may not) be the same as yours. As your advisor, however, they don’t matter. My job here is to help you navigate the uncertainty around these events in your investments, not in the rest of your life. Because of that, we can look at the economic and market facts, which is what I am here to do, and make a decision that is best for you. My only concern, sitting in this chair, is your financial future.” I have used something like this with multiple client groups, on both sides, and it has been effective.
A Focus on Long-Term Outcomes
Another way to approach this is to demonstrate how it works in practice. In the last two elections, for example, I had people—on different sides—who wanted to sell out when Obama was elected and when Trump was elected. In both cases, it would have been a mistake. This example is a good follow-up, as you can directly look at emotional decisions, tie them back to the factual results, and make the point that as an investor, data is what is needed most. And that is the job of an advisor. However good or bad things are now, investors need to be focused on the long-term outcomes, not the short-term headlines. Taking the politics out can and does yield better long-term results.
Bumps in the Middle of the Road
This approach doesn’t always work, of course. I typically get feedback, some of it ferocious, whenever I write a piece that touches on politics, with my recent blog post on Washington turning a light shade of blue a good example. Several people felt very strongly, based on that post, that I must be a hard-core Republican. Others thought that the piece showed a clear Democratic basis and needed to be rewritten.
What I tried to do, though, was write something straight down the middle, presenting the facts and reasonable conclusions in a nonpartisan way. With this one, more than some of the others, I clearly failed in the eyes of some readers. That is inevitable, and the feedback helps me get better, so I appreciate it. I will try to do better. But I also draw comfort from the fact that I got fire from both sides. The middle of the road can be an uncomfortable place as well.
Recognize the Disconnect
What if you are not an advisor but just concerned about your own investments? The advice is the same. Look at the data. Don’t make emotional decisions. Realize the U.S. economy and markets are largely disconnected from politics. And keep an eye on the long term. No matter how you feel about either administration, investing is a game of decades during which we will have a wide range of politics.
OTTAWA – Prime Minister Justin Trudeau says the NDP is caving to political pressure from Conservative Leader Pierre Poilievre when it comes to their stance on the consumer carbon price.
Trudeau says he believes Jagmeet Singh and the NDP care about the environment, but it’s “increasingly obvious” that they have “no idea” what to do about climate change.
On Thursday, Singh said the NDP is working on a plan that wouldn’t put the burden of fighting climate change on the backs of workers, but wouldn’t say if that plan would include a consumer carbon price.
Singh’s noncommittal position comes as the NDP tries to frame itself as a credible alternative to the Conservatives in the next federal election.
Poilievre responded to that by releasing a video, pointing out that the NDP has voted time and again in favour of the Liberals’ carbon price.
British Columbia Premier David Eby also changed his tune on Thursday, promising that a re-elected NDP government would scrap the long-standing carbon tax and shift the burden to “big polluters,” if the federal government dropped its requirements.
This report by The Canadian Press was first published Sept. 13, 2024.
Simon Jolin-Barrette, minister responsible for consumer protection, has tabled a bill to force merchants to calculate tips based on the price before tax.
That means on a restaurant bill of $100, suggested tips would be calculated based on $100, not on $114.98 after provincial and federal sales taxes are added.
The bill would also increase the rebate offered to consumers when the price of an item at the cash register is higher than the shelf price, to $15 from $10.
And it would force grocery stores offering a discounted price for several items to clearly list the unit price as well.
Businesses would also have to indicate whether taxes will be added to the price of food products.
This report by The Canadian Press was first published Sept. 12, 2024.
Quebec legislature member Youri Chassin has announced he’s leaving the Coalition Avenir Québec government to sit as an Independent.
He announced the decision shortly after writing an open letter criticizing Premier François Legault’s government for abandoning its principles of smaller government.
In the letter published in Le Journal de Montréal and Le Journal de Québec, Chassin accused the party of falling back on what he called the old formula of throwing money at problems instead of looking to do things differently.
Chassin says public services are more fragile than ever, despite rising spending that pushed the province to a record $11-billion deficit projected in the last budget.
He is the second CAQ member to leave the party in a little more than one week, after economy and energy minister Pierre Fitzgibbon announced Sept. 4 he would leave because he lost motivation to do his job.
Chassin says he has no intention of joining another party and will instead sit as an Independent until the end of his term.
He has represented the Saint-Jérôme riding since the CAQ rose to power in 2018, but has not served in cabinet.
This report by The Canadian Press was first published Sept. 12, 2024.
