Weighing The Week Ahead: Time For Politics?
Jeff Miller | Aug 12, 2012 11:44PM ET
As I have frequently written, we should all separate our political viewpoints from our investment decisions. This does not mean that we must ignore politics.
The astute investor analyzes possible political outcomes. This should be done without passion or emotion. What are the possible scenarios, and what will it mean for investments?
Last week I noted the relative absence of data and events, allowing time for assessment, analysis ---- and vacations for politicians in Europe and Washington. While this week's data calendar is also on the light side, the story will be quite different.
The GOP Convention is now only two weeks away, with the Democrats' event a week later. Now that we know Romney's choice for his running mate, the political campaign has a new edge and focus. I expect a week filled with speculation and projections about the Presidential election and what it means for financial markets.
Most of the commentary will focus on how the addition of Ryan will change the election odds. Before the choice, my examples .
Final Thoughts on the Election Effects
Most of the election discussion will focus on how the Ryan selection changes the possible outcome. It is fun to discuss the "horse race" aspect of campaigns. The personal pluses and minuses of candidates are also great for discussion since anyone can join in without actually doing much research.
We will get a major dose of this on the Sunday morning talk shows, but both campaigns are already in full spin mode. By contrast, here are two themes to consider, based more on changing the framing of issues:
- Should US policy place greater emphasis on deficit reduction? At what costs?
- Will Ryan offset and/or clarify the Romney position on health care? What stocks could be affected by Medicare changes?
In issues like this, stocks may react even before the election, just because the issues have been defined differently.
And one bonus forecast: Mark your calendar for October 11th, the night of the VP debate. There are already advance predictions for the success of the smooth-talking Ryan versus Joe Biden. One commentator made the Olympic analogy of LeBron James versus a smaller opponent -- dunking and shooting three's. In the debate game, driving expectations lower is half the battle, so the Biden camp will encourage these thoughts!
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