Making Dollars, Making $ense: Politics and the Market from a Historical View

At Marzano Capital Group, we strive to provide education on a multitude of topics that we feel our readers should take note of.  In this article, our goal is to educate our readers about how the political cycle tends to affect the markets.  The purpose is to provide our readers a basic understanding about what political outcomes could create a potentially more stable and positive environment for business, consumers, and tax payers alike.  I believe we all could use a positive slant on a very emotionally charged and sometimes very divisive topic.

We all understand that there are differences in the way people view the government, our elected officials, and their involvement in the economy and our everyday lives.  We, the voters, are the benefactors of the decisions made and we are the ones that must live with the decisions made by those that are elected.

It is totally logical to think that one voter’s view can be wildly different than the view of another voter. That difference is not a bad thing.  The difference and how it gets negotiated out is at the root of the political process. A functioning democracy, from an American’s standpoint, is one where issues must be negotiated and compromises made.  The negotiation process is the check and balance that helps keep the whole process moving forward in a two-sided political system. Someone will give up something to get something else. Assuming all of that negotiating is done on behalf of the voters and not the personal benefit of the elected official, it is a good system that can create positive outcomes for all of us over time. Total power being wielded by one political side alone, red or blue, is not sustainable long term and potentially creates an even more polarized voter base for the future.

Total political control can cause extreme volatility in the stock and bond markets due to the uncertainty that may surround things, such as the agendas of those who wield the most power.  History reminds us that this is a real possibility by way of the total or extreme shifts back and forth between the two political parties.  It is like the swinging pendulum affect, always swinging to the right and then back to the left, before turning back again. While those swings keep a grandfather clock ticking, they do not have the same affect on our political system.

A little time in the political middle for the next couple of years would be welcome.  A check and a balance of power tends to creates better outcomes, less volatility and keeps all stakeholders more engaged. Politics has not been a fun topic recently but if the concept of politics would change from polarization to negotiation, the system may function better in the future.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Advisor Alliance, a registered investment advisor. Independent Advisor Alliance and Marzano Capital Group are separate entities from LPL Financial.


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