One Day More: What Investing Can Teach Us About Elections

  1. In investing, broad diversification reduces risk. In elections, and in life, broad diversification of human connections improves our ability to understand differing viewpoints.

    In July, our family took a drive through Oregon as part of a trip to see family on the west coast. We found it somewhat surprising that the significant urban/rural divide is as alive and well in Oregon as it is in North Carolina, Kentucky, New York, and just about every other state in our union, as exemplified by the countless Trump flags and signs dotting the highways.

    I find it unlikely that many in Portland have spent much time with their more agrarian neighbors, or vice versa.

    In Charlotte, I’m fortunate enough to know people all over the political spectrum, something you’re unlikely to find in rural Oregon or urban San Francisco. In fact, I’d be willing to bet that many of our fellow citizens spend the vast majority of their time around people with whom they agree politically, and perhaps about a whole host of other topics. This restricted existence causes us to think less of those who are physically distant, as we’re confined to experiencing more limited viewpoints without getting to know the people who hold them.

    Mark Twain’s description about the advantages of travel comes to mind when considering this overlap:

    “Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one’s lifetime.”

    When I first read this quote, perhaps twenty years ago, I remember thinking that Twain’s advice applied mostly to international travel, as most nations have significant cultural similarities within their borders More recently, it’s become apparent that his suggestion might apply to people within our nation who have made characterizations about their fellow countrymen based solely on what they see online, and who someone intends to vote for in this election.
  2. Good investing is about controlling what you can, and ignoring what you can’t. The same goes for elections, and in life.

    While each of us have unique and ideal policy preferences and outcomes, it’s unlikely that any of us ever get everything we want from our political leaders.

    We do, though, have control over other things, like the way we treat those around us. It’s a lesson we’re trying to teach our kids, and one I need to remind myself of as the media tries to whip us into a frenzy in order to garner clicks and likes.

    In investing, we have no control over the markets, but we can control the way we treat our money, saving like pessimists and investing like optimists, minimizing costs and taxes.

    In life, finding ways to support and love our fellow man doesn’t require anything from the government.
  3. Focus on the long-term in investing, elections, and in life.

    We have no idea what this year will bring, nor should such short-term thinking make a major difference in our approach to investing, elections, or life. However, despite significant historical societal challenges, life has gone on. The American experiment is far from perfect, and (hopefully) far from over.

    In investing, those that have entertained short-term fears despite the mountain of historical evidence regarding relative asset class returns have missed out on building significant wealth over the long-term.

    In life, those who entertain short-term fears miss out on the or deepest riches of the human experience.

    Try and avoid treating election coverage like a day-trader watching CNBC: It’s not healthy for anyone.

I tend to avoid making predictions, but I’m going to go out on a limb and guess that the sun will come up on November 4th, no matter the status of the election. I’ll also hazard a guess that, once the result is known, many will be pleased while others will be extremely disappointed. For me, no matter the result, some things will be pleasing, others disappointing, and life will go on, God willing and the creek don’t rise.

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