This is not intended to be a political post. Indeed, I could easily have written these words four years ago, when Republicans were fretting over Joe Biden’s election.
Political partisans often freak out when their favored party loses at the ballot box, prompting them to take rash financial actions. But with Donald Trump set to return to the Oval Office on Monday, I’d advise sitting on your hands. The fact is, presidents are not omnipotent—and can face swift punishment if their actions unnerve the population. Consider:
- We may only have national elections every few years, but investors vote every trading day. Do folks disapprove of what the president is doing? Up go bond yields and down go share prices. My left-leaning professors at Cambridge would refer to this as a “capital strike.” Such big market movements make politicians sit up and take notice.
- We could also see a capital strike in CEO offices and boardrooms. Do business leaders dislike the direction that the president is taking the economy? They could opt to scale back marketing and capital spending, causing economic growth to slow and perhaps triggering a recession.
- Even consumers can go on strike. An extreme example: Think about what happened when fear of the future hit all of us during the early days of the pandemic. According to Bureau of Economic Analysis data, personal consumption expenditures shrank more than 10% in 2020’s first six months.
- A third of senators and all members of the House of Representatives are up for reelection in less than two years, and history tells us the ruling party typically loses seats. Right now, the Republicans hold the slimmest of majorities in the House. Today’s shocking revelation: Politicians like to get reelected—and at least some Republican congressmen will likely shy away from voting for legislation that could hurt their election chances in November 2026.
- Extreme policies are likely to be challenged in the courts, dragging out their implementation for months or even years.
- Resistance from federal government bureaucrats can also put a brake on radical change. On that score, readers might enjoy the British TV series Yes Minister. Inclined to blame the liberal “deep state” for resisting Trump? Yes Minister was partly inspired by the diaries of British Labor Party politician Richard Crossman.
My advice: Relax, grab the popcorn and enjoy the show. The media and White House decibel level may be higher than usual over the next few years. But I strongly suspect the movie won’t be so different from those we’ve seen before.
Any article that mentions not only political parties but individuals also, had to know that personalities and comments will for as they have that by and large are not welcomed or appreciated by most HD readers. A simple glance at responses easily shows that by all the red arrows
Stay the course, per Barron’s, S&P 500 returns by president
1953-1957 Eisenhower (R) 71%
1957-1961 Eisenhower (R) 34%
1961-1965 Kennedy/Johnson (D) 45%
1965-1969 Johnson (D) 18%
1969-1973 Nixon (R) 17%
1973-1977 Nixon/Ford (R) -13%
1977-1981 Carter (D) 31%
1981-1985 Reagan (R) 30%
1985-1989 Reagan (R) 68%
1989-1993 Bush (R) 52%
1993-1997 Clinton (D) 79%
1997-2001 Clinton (D) 73%
2001-2005 Bush (R) -12%
2005-2009 Bush (R) -28%
2009-2013 Obama (D) 85%
2013-2017 Obama (D) 52%
2017-2021 Trump (R) 67%
2021-2025 Biden (D) 56%
Average 40% per term or 10%/year no mystery there
Thanks Grant, good info.
The older I get, the more politics and the politicians become a drama show and a farce. I really don’t care. Jonathan is on to something. (FYI – Just heard you on Masters of Business with Barry, very good.). Art
I think that you may be assuming that the country/politicians/voters act rationally.
The last election proves that they do not as a whole. Remember around 54% of adults in the United States read below a 6th grade level.
I wonder where they went to school?
I prefer to avoid most political discourse and this site will be no exception. I see no useful point in inserting my political opinions. Why? One question I ask is: “Does a post further the action and intent of the original article”? The gist of the author’s article seems to be “step back and take a deep breath”. That can be difficult but it may help to clear the mind.
It isn’t easy. The morning after the election results, I got a phone call from a very angry relative. I refused to engage and won’t be an emotional blanket. Since then, he has calmed down. I suggest others do the same.
Jonathan stated “According to Bureau of Economic Analysis data, personal consumption expenditures shrank more than 10% in 2020’s first six months.” When the 2007-2009 banking fiasco and market downturn occurred a diner I frequented saw a 70% business decline, according to the owner. It was very empty. For example, prior to that there was literally a line for Friday’s fish fry meal. When their business collapsed, I was astounded as it was a favorite place of many retirees, whose income was at least in part from protected Social Security benefits. G and I increased our tipping to help the wait staff. Yet emotions (primarily fear) ran high. That business never fully recovered but limped along to experience the covid shutdowns.
So too, today. The world will continue to spin, the markets will do what they do, and the MSM will also spin. Life is a choice. Choose well.
Unfortunately a lot of the republicans running for reelection live in MAGA districts, so they can continue the MAGA mantra of hate, white nationalism, bigotry, homophobia and misogyny and still get re-elected. Also, the judiciary isn’t going to be any help. Look at who Don the Con got into the SC
I couldn’t agree more.
You must be a fun person to live with.
For some bizarre reason the Bob Dylan lyric from It’s Alright Ma (I’m Only Bleeding) comes to mind “Money doesn’t talk it swears”. How many ways/times does money (or lack of) impact us? Could be daily if you let ir.
The fact that a majority of the US people re-elected someone a someone convicted of financial misdealings, and who seemed to see business fraud as a standard operating procedure, suggests that the US as a whole is becoming less like northern Europe and more like Argentina. My own retirement is based on three legs–a pension, Social Security, and an income stream from tax-qualified savings. The pension and Social Security depend on the full faith of the US Government. Currently, almost half of the qualified savings are in fixed-income assets, and much of this also depends on the full faith and credit of the US Government. To pretend this is not a vulnerability would be like being a resident of Pompei in 78 AD, or of Malibu in 2024.
I believe we are soon to witness many unintended, yet foreseeable to many, consequences of policies soon to be implemented. That’s when the popcorn will come in handy. As Michael Scott once said on the Office, “Buckle up, it’s going to be a bumpy one.” 🙂
Yes, Minister is, in my humble opinion, the absolute BEST comedy series ever. I often rewatch episodes on YouTube.
“Yes, Minister” and “Yes, Prime Minister” are also available as books.
Maybe not on topic, but the British TV series, “Doc Martin” is also an absolute hoot. The actor, Martin Clunes, is perfectly cast as the stoic, stilted, socially inept but knowledgeable and competent Doc Martin.
Hard to disagree with Jonathan on the key point of “don’t make big moves.” But the tone of the new administration on immigration sounds long term. If folks are to be deported or, more tellingly, deterred from coming to the U.S., that means (a) fewer workers and (b) fewer customers for goods and services. A big show of force in the first few weeks of the new term (see today’s reports about a post-inauguration crackdown in Chicago) may have an economic impact for a longer period of time.
“This is not intended to be a political post.”
And then the list of optimism (mid term elections) and fears (extreme laws) then hope (resistance from the bureaucrats) are cited.
I just found this site hoping to avoid CNN.
But hey, “This is not intended to be a political post.”
I guess you missed the part about, “I could easily have written these words four years ago, when Republicans were fretting over Joe Biden’s election.”
You could have written those words four years ago, but you didn’t. Why not?
Because Biden isn’t as dangerous as Trump, and is a hell of a lot more qualified. Notice how Dems did NOT riot and attack others when the election was over. That is why
Nice. Let’s see if Jonathan calls out your blatantly political post, as he’s done in the past with right-coded posts. Not holding my breath.
There are plenty of comments in this thread from both sides of the political spectrum that tell me folks are far too wound up about politics. The bullying tone of your comments suggest you’re among them.
Bullying? I merely wondered if you’d be willing to enforce your own editorial policy in a consistent and neutral manner. That you’re not so inclined is disappointing, but not really surprising.
IMO you crossed the line of civility in your previous comment when you said Not holding my breath.
My articles and posts are often penned in response to what I see as wrongheaded thinking. Today, from what I’m hearing, many folks are considering big portfolio changes because of what’s happening in Washington. Some cautionary words seemed in order.
I generally tend to agree Jonathan and am staying the course. That said, I do also expect the limits of power to be tested this time. The current Supreme Court is worrisome.
Perhaps the new administration will be positive for our economy and our investments. See the large increase in NFIB Optimism Index. It ramped up after Trump 1.0 too. Hard data increased both times too.
I’m staying in the fight.
We are lucky we don’t live in a country with a parliamentary style government. Said another way, we are lucky that we don’t live in a democracy. Our representative republic with its separation of powers and written constitution, has democratic ideals, but the most powerful force affecting what happens is inertia. It is only when one party has very large majority’s in both houses of Congress, plus the presidency, that big changes can be enacted. And, as FDR discovered, the Supremes can still block some of what might happen.
They can until you pack the court.
Thanks! Your article reinforces my decision to keep my asset allocation generally the same. I have chosen re-balancing annually and have already completed doing so in 2025 based on my 12/31/2024 balances.
I do have a home equity line of credit (HELOC) that I use to help hit my taxable income target by controlling the amount of tax deferred account withdraws and I treat that end of year HELOC balance as a negative amount in the cash/bond portion of my asset allocation. I would appreciate any thoughts if doing so is how other HD readers think about their asset allocation.
I don’t plan to make any changes to my investments. My asset allocation is 50-45-5, and I am reasonably well diversified. However, I think you are overly optimistic on a couple of points.
— Elections to the House: I live in North Carolina, where I see the results of gerrymandering at every election. Instead of appealing to the whole electorate, Republican candidates appease the extreme right to make it through their primaries, and cruise to re-election. NC is a “purple” state and should have a roughly equal split of seats, and instead we have ten Republicans and four Democrats.
— The bureaucracy: the UK has far, far fewer political appointees in ministries than the US does in departments, and that was before the threats to increase the number. Resistance worked last time, I expect to see much less this time.
I suspect you would find blue states also gerrymandering districts to ensure the dominance of Democrat candidates. Both parties do it when they have the opportunity. It’s inherent in their nature.
When we see entrenched politicians regularly re-elected and catering to the more extreme elements in their party, we ultimately have to blame the voters—after all, they’re the ones doing the re-electing.
If voters would demand that office holders implement practical solutions to tackle the problems that face the country, rather than pay lip service to party activists, maybe we’d be more satisfied with government and less tolerant of strident politics.
At last, the voice of reason. Just the facts, delivered smartly. I hope you will comment more frequently, Philip. You help mitigate the senseless vitriol spewed by some.
I agree. Apart from casting my vote in every election, there is little else I can do. My portfolio allocation is designed to survive whatever expected or unexpected future events may occur. Nothing else for me to do, apart from occasional rebalancing except to enjoy living exactly as before.
Deficit spending by both parties is reaching a pinical with interest payments becoming overwhelming and the debt continuing to $36 trillion and becoming exponential. Something has to give, whatever that is. This has to be alarming. It certainly is for me. Doesn’t look like either party cares to change the out of control debt spending. This has to impact the economy and not on a good way.
I’ve posted similar comments in other articles.
In brief, we’ve never had federal control intent on breaking the rules. We don’t know what is coming, but we know that the new gov’t is racist and intolerant of dissent, supports shifting wealth to the wealthiest, is willing to shut down the gov’t and even default on its debt, and is dedicated to increasing debt while reducing revenues to cover it. We are in new territory.
Regarding dissent, from the early 20th C through the 1950s, white people, many who were striving to be middle class, were stripped of their assets &/or imprisoned because of their political views (or just their perceived associations). Is this coming back too?
Also, I’ve been wondering about tax free bonds issued in blue states. Will the states be punished, thus putting pressure on the ability to honor these instruments?
That’s the rational view. Yes, most of what’s offered as news is polarized editorial and sensationalized ad copy from both sides aiming to stoke fear of and anger against the enemy. But the weight of the bureaucracy and rigidity of the US constitution buffers against speedy change of any magnitude. And perhaps changes that do occur operate on a larger cycle, toward some mean of consensus held in our “deep culture” and expressed by our collective votes. At any rate, only the most fervid follow their political favorites to the detriment of their own finances. I’m holding steady.
Good advice. I’ll be keeping my eye on Social Security and Medicare but plan to lie low on the rest.
I rebalanced slightly (5%) down from 70% stocks to 35% bonds—policies not focused on supporting the middle class often results in decreased consumer spending and economic slowdowns (Keynes); plus it has been a very strong two year run in the markets.
Jonathan, thanks for your analysis. I’m taking your advice regarding popcorn, but am fatigued by this movie have changed the channel. Additionally, I agree with Quinn and am already doing the same as Michael below.
Jonathan, Most sensible advice. While not diminishing the impact Presidents can have on the country, I could never understand why so many citizens get their knickers”knickers in a knot” over politics.
The people have spoken—they chose a better economy over Donald Trump’s flaws. In the end, these things matter most—How well did you love? How fully did you live? How deeply did you learn to let go?
You make an interesting assumption about the economy.
I didn’t pull this notion out of a hat. This is not an assumption. Unlike consumers, economists feel pretty good about the economy— but people do not eat the GDP number, They eat the food their dollars can buy at the food market. Once food prices rise, they are slow to come down. Inflation has risen above the cost of living. Housing prices are rising.. And 52% of Americans are not convinced by the happy talk of economists.
A recent gallop poll shows the majority of people feel they were better off four years ago than they are today. Consumer sentiment is still at an all-time low.
Looks like the Gallup poll shows people have bad memories. I for one was trying not to die four years ago.
Randy, I’m happy you’re still with us and hope you’re doing well. We need more people like you to keep us on our toes regarding our usage and spelling of the English language.
Marjorie, I tend to agree that prices come down slowly, and I would add the words if at all. But I have noticed that when there’s a sale, the discounts tend to be deeper. For example, the cost of a 12 pack of soft drinks rose to $10, a ridiculous price in my opinion. But Krogers often has a buy 2, get 3 for free sale. Thing is, you have to load a digital coupon, which many people can’t or won’t do.
I don’t think the financial situation of Humble Readers reflects that of most Americans.
Unfortunately, lots of people (non HD lurkers) are struggling to pay for shelter and to feed their families.
Because we’ve been lucky we have the luxury of discussing how best we can invest our “nest eggs”.
We are very likely unrepresentative of tens of millions of voters whose PRIMARY concern is how well they believe the economy will do under a specific leader.
I agree. But how much better can the economy get? GDP grew at an annualized 3.1% in the third quarter, the unemployment rate is 4.1% and 12-month inflation is 2.9%. Those strike me as very good numbers. How much better can they get? I feel like we’ve collectively convinced ourselves that the economy is in dire straits.
A thousand upvotes.
Yeah! How much better can this economy get? Does anybody really think it was better under the last administration? If they don’t like this high GDP, low unemployment, and low inflation, well then – let them eat cake!
I’m an a charitable independent with libertarian leanings and I don’t think government should have so much influence over the economy at all – spending other people’s money on people other than themselves no matter which party they are. They’re not going to consistently get good value or good quality. Good value and high-quality come from spending our own money on ourselves and those in our community and our world who we love.
Edit: I apologize for being polemic above. Like a couple of other commenters have said, I come here to get away from politics.
Anyone is welcome to turn a blind eye to the reality that most of us “earned” 20+ percent with our market investments last year without getting off the couch. On the other hand, the people who work in factories to make the things that we are using to communicate with each other right now probably didn’t get a 20% pay increase – and had to commute then work 40 or more hours a week to boot. They are the ones who defeated the current administration and that is what the original post Jonathan did is about to me, as well as how we might consider relaxing and staying the course.
Had the recent inflation occurred over a longer period of time such as what occurred in the cost of university tuition after well-intentioned federal politicians created the Student Loan Marketing Association (SLMA) also known as “Sallie Mae“ in the early 70s, the result of the election might’ve been different, but such a sudden increase in prices was not overlooked by the majority of voters this time. You can acknowledge this reality or ignore it at your peril just like I had to acknowledge the reality that index funds were a better investment for me in the long run than my professionally managed mutual funds or ignore that at my peril.
Somewhere in my library, I have a book titled something like “the dying of money“ or something like that. If I remember correctly, it was written in the early 1970s and says that inflation always shows up first in the stock market. Most of us here benefited from that inflation, but I beg you not to be disrespectful to the people who weren’t invested in the market and into are stuck with higher prices and stagnant wages.
Dick, I’m forever the optimist.. There’s a Chinese proverb: “Keep a green tree in your heart and perhaps the songbird will come”.
Yet, Marjorie, if you ask a Chinese immigrant why people get their “knickers” twisted over politics, you’d get a very different view in the wake of the pandemic. The politically-driven “China Virus” conspiracy theories had a direct and profound effect on my loved ones. They’d tell you that green trees are hard to find in many American hearts… because of politics.
I won’t do anything from a portfolio standpoint. But when we travel internationally, and I am asked are you an American, I will embarrassingly, rather than proudly say yes, but…
I’m curious as to why you’re embarrassed to admit to being an American. What is it about America that you find shameful? Is it that Americans elected Donald Trump to the presidency?
Don’t you find it unusual that millions of people still want to immigrate to America, regardless of Washington politics?
Philip, always gratifying to read your comments; you make a lot of sense.
Along the same lines, why do so many Hollywood Elites threaten to leave the country if their chosen candidate is not elected—but they never do.
Because in their hearts they know they could never achieve, in a foreign country, what they have here.
So much nonsense from people who live in a make believe world.
I would so like to respond to your inquiry but out of respect for Jonathan and keeping things civil on the site I will not. I’m sure there are many HD readers who can figure out why. That’s why I ended my first post with, but…
David, undoubtedly you are displeased with the current state of our politics and the result of the last election.
But I always notice one thing about American life. Granting citizenship to immigrants is perhaps the greatest gift you can bestow upon them. They are unabashedly proud to be American. Yet the native-born often seem focused on what they perceive is wrong with the country.
I’m not aware of people lining up to immigrate to China, or Russia, or North Korea or…Venezuela. Immigrants to America must see something that the native-born appear blind to.
Our current politics, however distasteful, shouldn’t lead us to condemn the entire country, its founding principles, or the good it has done for the world (e.g., the Marshall Plan in Europe after WWII). Despite our politics, we still have much to be proud of. I, for one, won’t hesitate to admit being an American.
Philip, you raise some very good points, particularly about all the good Americans have done for the world. Unfortunately for students of history, scores have been on the decline for a decade, with Civics not far behind. Conservatives and Liberals have very different ideas about how history and civics should be taught and what should be prioritized.
perhaps the widening gap between generations, when it comes to patriotism,is that the media is so desperately liberal. And young people are so impressionable.
For these reasons and more Americans who love this country should heed the clarion call.
I’m not sure why but when we travel – abroad or even, sometimes, within the USA – somehow people think we’re French.
When we are walking around people will approach us and in their halting French ask us questions.
What’s wild is that I never took any French language courses.
My wife, however, took lots and lots of French and has been in a “French Language” Club for decades. So she’ll respond and I’ll just utter the occasional “Oui”.
I tended to say “born in England, live in America”. There were places where a smile would be replaced by a frown. Interestingly, one was Syria (in 2009), where more recent events were apparently outweighing colonialism.
Apologizing for Jessie Helms and George Bush became tedious, especially as I didn’t become a citizen, and therefore able to vote, until 2002.
Sad but true David. My wife has actually told people that we’re Canadian.
A couple I know recently moved to Canada. I’ve refrained from teasing them that they may once again become citizens of the USA.
In the late 1980s, a couple I knew asked my advice on whether they should take all their money and buy a property in France — so they could escape George H. W. Bush.
HAHAHAHAHAHA
If folks think that what we’re seeing today is unprecedented — out-of-control budget deficits, outrageous rhetoric, extremist groups, threats of political retribution — they need to get their memory checked.
I didn’t like Bush on cultural issues and he started a forever war which his father wisely avoided, but he and all presidents of my lifetime honored the rules of preserving the economic system. I never worried for basic economics. The primacy of the American Dollar was safe with both parties.
What we have now is unprecedented, at least since the mid-1930s.
I agree and imagine that Julius Caesar would as well.
I sincerely hope you are right, but when people post on social media we have a new George Washington and a gift from God it makes me nervous. I suppose it’s been said before, but are we treading new ground.
One test will come when we see what happens with SS and Medicare funding and health care.
I worry about taxes too, not raising them, but not, not raising them in light of deficits.
The talk of cutting waste and being more efficient spending in government reminds me of corporate life where every few years there was zero based budgeting, mandated budget cuts, and new consultants to help us be better at what we did to save money.
Big splash for a year or so and then back to normal and we did it all again a couple of years later.
i am always amazed when a company looks to save money by downsizing workers. If they weren’t needed how did they get there and stay there in the first place?
Apply all that to a government bureaucracy and it’s laughable, especially when any Congress keeps new spending going.
I share your concerns and your corporate experience with “productivity consultants”. I’m sufficiently diversified and planning to stay the course with my investments. I’m watching SS and Medicare but not ready to say “it’s different this time”.
Yes and the same was said when Obama took office including awards given during the first days of his presidency. It has happened before and will happen again- to both sides of the aisle. You are also welcome to pay more to the IRS if you feel so inclined. Best to you.
Good advice. I’ve no intention to do anything differently now than I did a month or a year ago.