• Howie Town
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  • Politics and Investing...Mix Them At Your Own Risk

Politics and Investing...Mix Them At Your Own Risk

Good morning…

I have always been told that politics and investing do not mix.

I have never made a seed stage investment or stock investment because of who was President.

For my first 58 years I have never had to think about interest rates or capital gains tax rates when investing.

Of course buying my first home and Ellen felt crazy unaffordable (our mortgage rate was eight percent, but the house (yes a nice house in Phoenix) was $160,000. In hindsight it was crazy cheap and I should have bought the whole damn block.

The rise in interest rates post COVID until today have been a win for our family as we had loans locked in at two plus percent on our homes and get paid 5 plus percent on our cash.

I doubt my ‘luck’ will continue.

I have not talked to enough people in their 20’s and 30’s about how politics, interest rates and tax rates are making them think, feel and behave but from what I read it is stressful. They do not feel lucky or that a home is affordable.

I definitely did not think about politics or which party was ‘destroying America’ when I was working my first job or just getting married, but I do think younger people today are forced to hear about politics and politicians because of social media.

I am not in the mood to get into politics and the markets at the moment, but I think Josh had a great piece about ‘How The Trump Biden Debate Played Out on Wall Street’.

Another great piece on politics, news, narratives and investing is from Ben Hunt (he will be doing a fireside chat with me on all this at Stocktoberfest in October) titled Joe Biden and the Common Knowledge Game. The gist:

Common Knowledge is what everyone knows that everyone knows.

Common knowledge is why coronations and executions are held in public – not so a crowd can see the new king or the hanged man, but so a crowd can see a crowd seeing the new king or the hanged man. Common knowledge is why sitcoms have laugh tracks, why American Idol has a live studio audience, and why professional sports teams pipe in crowd noise. Common knowledge is why the Egyptian government fell in 2011 after a televised protest in Tahrir Square, why the Romanian government fell in 1989 after a televised protest in Palace Square, and why the Chinese government will arrest you today if you distribute pictures of a 35-year-old protest in Tiananmen Square. Common knowledge is why inflation has been non-transitory and persistent, why the US withdrawal from Afghanistan collapsed into a fiasco, and why the US response to Covid was so heavy-handed and ineffective. Common knowledge is why the 2024 Biden/Harris campaign has collapsed.

Have a great day.


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