• 2 days How Taxpayers Are Bankrolling The EV Revolution
  • 3 days The Coronavirus Is Crushing China’s Car Market
  • 4 days Fighting For Survival In The Streaming War
  • 4 days Want A Job? Forget About A Bachelor’s Degree
  • 5 days Another Major Car Maker Is Backing Hydrogen
  • 5 days Are Americans Finally Sold On Soccer?
  • 6 days Is The Tech Bubble About To Burst?
  • 6 days Coronavirus Could Cost Tourism Industry $80 Billion
  • 7 days What Web Traffic Trends Can Tell Us About The World
  • 7 days Miners Face Greater Headwinds
  • 8 days Boris Johnson Proposes Billion Dollar Bridge To Northern Ireland
  • 9 days Goldman Slashes Oil Price Forecast By $10
  • 10 days Tesla Raises $2 Billion In Share Selloff
  • 10 days What The T-Mobile Takeover Of Sprint Really Means For Markets
  • 11 days The U.S. Has Charged Huawei With Racketeering And Conspiracy
  • 11 days How Hydrogen Could Become The Fuel Of The Future
  • 11 days Millennials Can’t Retire, But They’ll Still Have To Help Their Parents
  • 12 days This Gold Miner Just Increased Its Dividends By 40%
  • 12 days Airbnb IPO Under Threat As China's Economy Drags
  • 12 days The Infamous Equifax Hack Just Became A National Security Issue
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Dock Treece

Dock Treece

Dock David Treece is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and is licensed with FINRA through Treece Financial Services Corp. He provides expert…

Contact Author

  1. Home
  2. Markets
  3. Other

Investor Sentiment Follows Party Lines

Though many try, in our business it's extremely hard to ignore politics. Aside from being difficult, it can also be expensive. After all, government policy has a tremendous impact on economics, which in turn influences the global financial markets.

As we've written before, generally speaking we try to remove ourselves from our own political opinions while analyzing investments. Unfortunately, we can't ignore them completely. To do so would be to ignore one of the biggest factors impacting the investment world.

However, while we have our own opinions, we also recognize that when analyzing the current political or economic atmosphere, our opinions simply don't make a difference. This has nothing to do with whether our views align with current party in power. It is simply necessary that we understand that our own opinions are of no consequence, and we need to take an objective view of the world.

Each and every day market prices are determined by consensus. Though the market continues to reach this consensus, we have been seeing markets become increasingly divided - just like the current political situation in this country. As in Washington, people on Wall Street are tending towards extremes.

Today some argue that we are in the midst of the most severe depression since the 1930s, while others argue that we are on the verge of one of the fiercest bull markets in a generation.

It might seem strange, but these forecasts are strongly influenced by political beliefs. Beliefs, not in what politicians in Washington SHOULD do, but how circumstances will likely play out because of what's already been done.

Across history, the vast majority of the time this country is relatively centrist, politically speaking. At different times in history, though, the US can become torn between extremes. This seems to be one of those times. Further, the extreme opinions on politics are also impacting people's view of the economy and markets.

For an example of the division currently facing our country, look no further than Glenn Beck's recent rally at the Lincoln Memorial. Just as importantly, explore the differing reactions people have to that event.

It's important to understand the factors weighing on the world today, but just as important is where we go from here. Some say revolution or a second civil war. These are so unlikely that they're hardly worth considering.

Through history, while extreme opinions sometime come to dominate political or business climates, they trend always back to the center. This theory of mean reversion applies across a great deal of disciplines, from meteorology and chemistry to sociology and philosophy.

Thankfully, it also applies to economics, politics, and finance. Each of these subjects is the study of either people or the world around us, both of which have natural equilibriums that exist. Despite the occasionally extreme conditions that occur, these equilibriums tend to be sought out.


Back to homepage

Leave a comment

Leave a comment