The Pattern
Tariffs have consumed more thought and hot air over the last week than at any point in my recent memory.
Last week we were told that tariffs against significant trading partners would be coming. The economists and analysts obsessed about the positive and negative ramifications of these tariffs. The executive order was signed on Saturday to no one’s surprise. The day before they were to go into effect, relatively brief conversations delayed them for a month (at least for Mexico and Canada).
I don’t care whether you like or hate the President politically or whether you like or hate the President’s personality, it is very clear that that he is skilled at getting the media’s attention and then manipulating them into obsessing about what he does.
You would think at some point they would catch on to his methodology and refuse to participate in the pattern. But that is not their nature, and he knows it.
The media’s livelihood depends on your worrying about a topic so much that you will dedicate your precious time and brain capacity to ensure that you get every update as events unfold. Capturing and retaining your eyeballs or ears is the only way they can sell the advertising dollars they need to survive.
My advice to keep your portfolio on the right track during times such as this is quite simple: get used to it. The sooner you are desensitized to the recurring apocalyptic headlines that will be surfacing every week or so for the foreseeable future, the better prepared you will be to maintain a rational, apolitical investment strategy.
Your portfolio knows absolutely nothing about politics. However, it is constantly subject to the whims of those who have been infected by fear and greed. Right now, plenty of those whims are being driven by a political virus for which there is no effective antibiotic. We will just have to let it run its uncertain course.
Successfully running an uncertain course requires time. As important as today’s headlines seem in the moment, their impact is significantly diminished as the present slowly converts to the past. Can you even remember the significant headlines from eight years ago off the top of your head? Probably not. So much has happened between now and then. Time has that effect.
Time also has that effect on your portfolio. Time is the most powerful asset you have. This is why our disciplined investment process is designed to put time on your side. If you may need to convert some of your investments to cash within the next seven years, our process is to invest those investments more conservatively or not at all.
Only if there is a minimal chance you will need to convert investments to cash flow within the next eight years does our process suggest investing in investments with significant short-term risk (and historically higher long-term returns). Time can be profitable when harnessed correctly, but it requires impulse control to work effectively.
For your financial well-being, please refuse to react to the predictable political pattern that is likely to be repeated for the foreseeable future and ensure that your portfolio has the correct amount of time for your personal financial plan to flourish.
Quote of the week: Jim Rodgers: “When I see hysteria, I usually like to take a look to see if I shouldn’t be going the other way. Just about every time you go against panic, you will be right if you can stick it out.”
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
Past performance is not guarantee of future results. All indices are unmanaged and can’t be invested in directly. The modern design of the S&P 500 stock index was first launched in1957. Performance back to 1950 incorporates the performance of the predecessor index, the S&P 90.
Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
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