Three Things I Think I Think – Muting Trump And Biden

Sorry for the recent radio silence. I’m trying to focus my energy on writing about the markets when it’s pertinent as opposed to just spewing a daily or weekly note for the purpose of generating eyeballs. 

1) Hit the mute button. There is going to be a lot of noise in the coming months about who will win the Presidency and why that person is good or bad for the country. As I’ve noted on many occasions, politics is the absolute best way to wreck your portfolio. The objective fact is that the economy is extremely complex and the political relationship between markets and politicians is even more complex. For instance, you might claim that President Trump is the most important factor in an economic cycle. But what if he has a Democratic Senate and House? What if he has a Republican Senate and Democratic House? What if some world-changing boom (like the internet) just happens to occur under his watch? What if some world-changing collapse (like a pandemic) just so happens to occur under his watch? There are so many random variables in there that it’s crazy to cherry-pick one variable (like the President) and then make sweeping generalizations.

So, hit the mute button on politics for the next month. Yeah, I know it seems really important and it probably is in other aspects, but the stock market isn’t going to rise and fall solely based on the President. There are just too many other important variables that play a role there. So, as always, don’t let your politics infect your portfolio management.¹

2) Trump’s tax mess. The NY Times apparently got their hands on Trump’s tax returns and the media was having a field day with it. What to make of this? It’s a messy subject, but the bottom line seems to be this:

  • Trump is aggressive with his tax deductions.
  • Trump doesn’t pay a lot of taxes most years.
  • Trump has managed some businesses very badly.
  • Trump has managed some businesses very well.
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