Like no other political contest in recent memory, the nation is transfixed on the 2012 presidential election. But while Main Street looks to the fall campaign with great anticipation, many investors do not. When you step into the voting booth this fall, you should consider which candidate is not only the right person for the nation, but your personal finances as well. Indeed, this is the Politics of Investing.
Today’s issues of energy, gas, credit, shrinking home values, and rising health costs all can seem very daunting. But as President Harry Truman told us, the United States has always anticipated the future with courage and excitement. “America was not built on fear. America was built on courage…” As investors, we have witnessed extremely difficult times, from assassination to war to oil embargoes to crippling recessions. And in every case, we have not only persevered, but have gone on to new highs.
Think back some 75 years, and today’s economic concerns can be put into much better perspective. The country was debilitated by the Depression when Franklin D. Roosevelt was elected president in 1932. Congress, and our nation, hung on every word of FDR’s first inaugural address, hoping for national insight. He gave us national inspiration. “Let me assert my firm belief,” Roosevelt solemnly intoned, “that the only thing we have to fear is fear itself.” Of course, he was right. And, desperate as those days were, $100 invested after that historic speech would have grown to some $442,000 (average annual return 11.90%) by December 31, 2007. Granted, even $100 was hard to come by back then. But Roosevelt’s message was not about material things. Roosevelt’s words then, and still today, speak to faith…in our nation, in our future, and in ourselves.
(Investment growth of $100 (from 3/06/33 to 12/31/07) is based on the S&P Index, which is an unmanaged list of 500 widely held U.S. common stocks frequently used as a measure of the U.S. stock market performance. This index is not available for direct investment.) Ned Davis Research, 2008.
If anyone tells you that America’s best days are behind her, they’re looking the wrong way.” ~ George H.W. Bush.
It’s almost as if every visit to the grocery store, every gas station fill-up, utility bill, credit card statement and mortgage payment is getting harder and harder to make. It can make you miserable. In fact, economists have a way to measure it. It’s literally called the Misery Index, and it monitors the nation’s unemployment and inflation rates. In January, 2012, the Misery Index registered 11.23. Not great. But a far cry from the post-World War II record of 20.76, set in 1980. Speaking of misery, Ronald Reagan said, “Recession is when your neighbor loses his job. Depression is when you lose yours.” We have certainly seen extremely high unemployment as of late. Yet even considering those dismal days, investors who sat on the sidelines would have missed out on some significant opportunities, including the bull markets of 1985, 1998 and 2002. Source: miseryindex.us, 2012.
Finally, one last quote… Thomas “Tip” O’Neill, Jr. (1912-1994) once famously said, “All politics is local.” O’Neill knew – perhaps better than most – that everything from city council elections to presidential politics centers on bread and butter issues. More than a few presidents have been unseated on economic issues alone. So it would be understandable if you were to ask yourself this fall, “Which party will be better for my investments?” Please vote responsibly!
For more information go to www.waterstonewealth.com or call 918-272-1120. Melanie Hasty-Grant, Experienced Licensed Professional Counselor and Managing Principal at Waterstone Private Wealth Management.
Securities offered through LPL Financial. Member FINRA, SIPC. ASK THE MONEY MAVEN STRAIGHT-FORWARD, NO-NONSENSE TALK ABOUT YOUR MONEY The Politics of Investing
*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial advisor prior to investing.