Investing in a highly politicized climate
SEP. 10, 2019
Investors have a lot on their minds these days, from trade negotiations, to geopolitical tensions, to a potential global economic slowdown and possible recession. There’s also a U.S. presidential election on the horizon, adding political noise to investors’ desire for clarity and understanding.
Investor perceptions of risk and reward influence the decisions they make in their portfolios—and political leanings can distort these perceptions. Politically-inclined investors tend to see the markets as less risky and more attractive when their preferred party is in power. In contrast, those whose party is out of power are likely to feel more pessimistic and see greater risk in the markets.
In this age of information abundance, how should investors read and use the news for their benefit? Tune out the noise if you’re looking for prudent guidance and actionable insights. Then, pay attention to the fundamentals, which have a bigger influence on market value than the fickle winds of the political climate.