As a financial adviser who works with wealthy clients, I have seen just how hard it has become in recent years for many people to separate their politics from their investments.
During the Obama years, many of the politically conservative investors I work with needed to be pulled off the sidelines as their confidence in future returns was shaken by the prospect of socialized health care, the Troubled Asset Relief Program (TARP) and the ramping up of bank regulations coupled with “Helicopter Ben” monetary policy from the Federal Reserve.
Investing behavior wasn’t always so influenced by politics. The occupant of the White House during the Reagan, Bush (41), Clinton, and Bush (43) years did not elicit the same response from clients as we’ve seen during this administration.
In some cases, those conversations spanned several quarters as many wanted to stay in cash in an economic environment that just didn’t make sense to them, while others impulsively gravitated to gold and precious metals in large part due to the barrage of advertisements on talk radio and television hitting their mark in making investors believe they were secure.
Those were tricky conversations compounded by the fact that the economy was coming off what felt like the most painful run in our lifetimes, and I certainly couldn’t make any guarantee that the economy would fully recover.
At the same time, my politically liberal clients felt emboldened with their money: Stability had seemingly been restored, health care was about to go through a renaissance and, with their party in power, they felt assured the U.S. stock market looked very investible coming off of those generational lows. Those eight years rewarded investors who stayed the course well and gradually even the people with the strongest opinions came to realize that their views were not necessarily in line with the market.
Flip the script
After the surprise outcome of the 2016 election, everything flipped. In…
