For better or for worse, the undercurrents of politics play a crucial role in shaping investment outcomes. The delicate dance between politics and market performance is often complicated and unpredictable, but it is undeniably significant. The exact relationship between politics and markets will vary in any given month or year, but politics certainly matter to markets and investing. It’s not just about the numbers and charts; it’s about understanding the real-world dramas unfolding in governments around the globe and the key elements that directly affect regulations, prices, interest rates and more. For these reasons, exploring the many ways markets move with the political winds can help prepare you to navigate their impact more effectively.
Understanding Political Risk in Investment
Navigating the complex world of political risk is crucial for investors. It’s all about understanding how political events, from policy changes in a single country to major geopolitical upheavals, can impact market stability and investment outcomes. This broad spectrum of risk might include anything from an unexpected election result to international trade tensions, each with its own set of implications for businesses and markets. For example, sanctions on a country could disrupt global supply chains, hitting company profits hard, while a move toward economic liberalization in another region might create lucrative opportunities for growth.
Investors must therefore cultivate a deep understanding of geopolitical dynamics, looking beyond the headlines to anticipate how political developments might influence market conditions. However, it’s important to recognize that political risk offers both hazards and opportunities. An environment perceived as risky due to political instability might deter some investors, but for others, it represents a chance to enter markets at a lower cost or to capitalize on emerging opportunities as conditions stabilize. This dual nature of political risk underscores the importance of nuanced analysis and strategic planning when it comes to your investment decisions.
The Government’s Hand in Market Movements
Regulations, while aimed at ensuring fair play and consumer protection, can introduce additional costs for businesses. Investors must stay attuned to these government actions, predicting policy changes and their potential impact on different sectors. Understanding how governments can sway markets is essential for making informed investment choices. It calls for a keen awareness of the interplay between policy decisions and market performance, highlighting the importance of a strategic, informed approach to investment that navigates both the challenges and opportunities presented by government intervention.
The idea that markets function in isolation from government influence is far from reality. In fact, government policies play a pivotal role in influencing market dynamics, from shaping economic growth through monetary and fiscal policies to affecting industry competitiveness with subsidies and tariffs. Consider how central banks’ interest rate decisions directly influence borrowing costs, thereby affecting consumer spending and business investments. Or how government support can make certain industries more competitive, though it might also lead to market distortions.
The Indirect Impact of Politics on Stock Performance
The stock market often feels the ripples of political decisions, even if these waves come indirectly through economic policies, regulations, and the appointment of key figures like the Federal Reserve Chair. These factors collectively influence how investors feel about the market, which in turn can affect company profits and stock prices. While political headlines can trigger immediate volatility in the stock market, the real impact usually unfolds over time as policies are implemented and their effects on the economy become clear.
For instance, a new tax reform can change the profitability landscape for businesses, influencing stock performance across sectors. Regulatory changes in environmental policy might benefit renewable energy companies but pose challenges for traditional energy sectors. Moreover, appointments to positions like the Federal Reserve Chair can shift monetary policy directions, affecting interest rates, inflation, and economic growth expectations.
Investors should be mindful of these dynamics, understanding that while political events can sway market sentiment in the short term, the underlying economic and business fundamentals are what drive stock performance over the long haul. This perspective helps investors make decisions based on planning rather than reactive to the political news cycle.
Navigating Political Waters in Investment Strategies
Understanding the intricate relationship between politics and markets is paramount for investors aiming to adopt a strategic approach and manage political risk effectively. Here are some actionable steps to incorporate political risk assessment into your investment strategy:
- Stay Informed: Political developments anywhere can impact global markets.
- Diversify Wisely: Spread your investments not just across different sectors but also geographically. This strategy reduces your exposure to political turmoil in any single region, buffering your portfolio against localized instability.
- Adopt a Long-term Perspective: While political developments can influence market sentiment, solid investments are typically those well-positioned for long-term growth, regardless of the political climate.
Politics and Your Portfolio
Politics and markets are often discussed together. For investors, understanding what matters is crucial for developing a robust planning strategy that can weather political storms. By staying informed and focusing on long-term fundamentals, investors can navigate the complexities between politics and markets and, hopefully, identify opportunities while mitigating risks in their pursuit of planning success.
When in doubt, remember utilizing proper planning is how you can best manage political change and unrest.
For more information on how politics may affect your wealth, read “Wealth on Purpose” by Bryan Ballentine.
Have a great weekend!
Sources: Located at the bottom of the article
Golf Tip of the Week
The Secret To Silky Smooth Tempo? Experts Reveal 3 Keys
There’s no better place to be as a golfer than Tempo Town USA.
It’s the place where the swings are smooth, and the power feels effortless. Diving into the technical minutia of the golf swing can often leave golfers feeling lost and confused. But everyone can relate to a golf swing with good rhythm. It is, in many ways, the one thing we can all appreciate.
Fred Couples remains the longtime Mayor of Tempo Town, but in recent weeks we’ve seen many of its smooth-swinging citizens pop into contention in various places: Luke List came close to a victory at Riviera; the powerful Jake Knapp won in Mexico; while Max Homa and Rose Zhang contested under the lights at The Match.
Looking to book your own ticket to Tempo Town USA? Here’s a few tips.
1. Get the club moving
Nobody would deny that Ben Hogan had a beautiful, flowing swing. A longtime resident of Tempo Town. He’d often say that he tried to take the club away “low and slow,” and many golfers adopted their advice for themselves. But look at his backswing. It doesn’t look all that slow to me, yet it’s still smooth and rhythmic.
The point here is that many coaches will tell you that a smooth swing doesn’t mean a slow swing.
As Dr. Young-Hoo Kwon, a noted biomechanics professor at Texas Woman’s University who studies golf, explains: the fast, “active” backswing will engage more muscles in your body that will create a smoother energy transfer from backswing to downswing. Swinging a rope back-and-forth can really help create this smooth and powerful “flow.”
“With the slow backswing you can introduce all sorts of problems, by simply making the backswing fast, we can eliminate a lot of them.” Dr. Kwon says. “In a sense you cannot go too fast.”
One of Dr. Kwon’s favorite golf swing tempos? Vijay Singh, for exactly that reason. An up-tempo backswing, then a smooth recoil into the ball.
Golf Digest No. 2-ranked teacher in Tennessee, Jeff Smith, agrees.
“A lot of golfers can gain easy speed, and improve their kinematic sequence, with a faster backswing,” Smith says.
Up the pace of your backswing, and it could land your swing inside the golden 3-to-1 ratio outlined in John Novosel’s popular book Tour Tempo, which found many of the best players tend to have a downswing that is three times faster than the backswing, and no slower.
2. “Levitate” at the top
Golf Digest No. 1-ranked teacher Mark Blackburn is the longtime coach to Tempo Town resident Max Homa. I asked Mark what the rest of us can learn from Max’s tempo, and he provided a brilliant visual.
“We work on a slight levitation at the top of the backswing,” Blackburn says. “He feels like he can catch the club in transition to then turn aggressively. That turns into silky smooth speed.”
That idea of not forcing a delay but waiting for the best moment to swing aggressively through is one that Couples says makes his golf swing look “effortless,” as he explained to Golf Digest:
“The first thing I do is make a big shoulder turn…Once I get the shoulder turn back, I don’t need to think about the change of direction [on the downswing],” Couples says. “After I clear my left hip, there’s a point where I think about releasing the club down the line.”
3. Constant acceleration
Finally, you’ll often hear golfers with nice tempo explain that they feel like their golf swing is constantly gaining speed. Like a car accelerating down a track, or as Luke List told me: Feeling like he’s “pulling a bow and arrow” on his backswing.
Again, no sudden changes in speed. But continuous acceleration, as Golf Digest No. 9-ranked coach Dana Dalquist explains of Knapp’s golf swing.
“I think it’s the timing of it that appeals to people,” he says. “It’s not ballistic. It’s long speed. His rev-up is smooth, and he gives his club a lot of time to rev up. That longer pattern can work well for many players.”
Something to aspire to, and with a bit of practice, perhaps enough to book us our own trip to Tempo Town.
Tip adapted from golfdigest.comi
Recipe of the Week
Corned Beef & Cabbage Cheese Quesadillas
4 Servings
Ingredients
Quesadillas
- 3 tbsp. neutral oil
- 1 small yellow onion, coarsely chopped
- 6 cloves garlic, coarsely chopped
- 2 tsp. kosher salt, divided
- 4 c. thinly shredded green cabbage
- 1 lb. store-bought or homemade corned beef, cut 1/4″ thick
- 4 tsp. unsalted butter, divided
- 4 (10″) flour tortillas
- 8 oz. shredded Swiss cheese
Dipping Sauce
- 1/4 c. finely chopped sauerkraut, drained
- 1/4 c. mayonnaise
- 1/4 c. sour cream
- 2 tbsp. chopped fresh parsley
- 2 tbsp. stone-ground or Dijon mustard
- 1/2 tsp. kosher salt
- 1/2 tsp. Worcestershire sauce
Instructions
Quesadillas
- In a large saucepan over medium-high heat, heat oil. Cook onion and garlic, stirring occasionally, until softened, about 10 minutes; season with 1 teaspoon salt. Reduce heat to medium. Add cabbage and cook, stirring occasionally, until wilted and caramelized, 5 to 6 minutes; season with remaining 1 teaspoon salt. Remove from heat and fold in corned beef.
- In a medium nonstick skillet over medium heat, melt 1 teaspoon butter. Place 1 tortilla in skillet, arrange some cheese on one side of tortilla, then top with one-quarter of cabbage mixture. Sprinkle cabbage mixture with a little more cheese. Fold other side of tortilla over to create a half-moon. Cook until tortilla is toasted, 1 to 2 minutes per side. Repeat with remaining butter, tortillas, cabbage mixture, and cheese.
Dipping Sauce
- In a small bowl, combine sauerkraut, mayonnaise, sour cream, parsley, mustard, salt, and Worcestershire.
- Transfer quesadillas to a cutting board. Cut into half or thirds. Serve with sauce alongside.
Recipe adapted from Delish.comii
Travel Tip of the Week
Pet Owners Say This Car Seat Cover Is a Must-have for Traveling With Anxious Animals
“My only regret is not buying this three years ago.”
One of the best parts of owning a pet is having a constant adventure buddy. Hikes, the park, and even casual strolls through town are infinitely better with a four-legged friend. There are, however, downsides to these shared outings. Traveling with a pet means putting them in the car, which means seats covered in hair, dirt, and a stench that just won’t quit. Amazon shoppers may know how to make that tradeoff a thing of the past, though, with the Pet Union Dog Seat Cover.
The car cover promises to protect car seats from pet hair, dander, mud, and whatever else may get dragged in. Shoppers are happy with both how versatile and durable it is, with some finding it not only keeps their seats clean and pets secure but also prevents some related issues. One shopper noticed that their dog’s anxiety improved with the Pet Union Dog Seat Cover, which also shielded their car seats from excessive drooling during road trips.
To buy: amazon.com, $30 (originally $35)
“I bought this seat cover mostly as protection from the anxious boy’s drool,” the shopper started, “but was happily surprised to find he was about 95 percent calmer during the whole trip! He was still a bit nervous, as he’s a nervous guy, but the hammock seemed to help him realize he could just lay down and relax – and it also helped keep him from being overstimulated and from climbing up in between the front seats. My only regret is not buying this three years ago when we first adopted him!
The Pet Union Dog Seat Cover is normally $35, but thanks to a clickable coupon, the must-have is 15 percent off for a limited time. Shoppers swear by the product, as shown throughout the 3,000-plus ratings on Amazon. One shopper said they bought multiple for their two cars, noting that it “fits both perfectly.” The reviewer added that it “keeps the back seat dry and our beloved Porkie (Pug x Yorkie) watertight after adventures down the beach and in the lakes.”
A second reviewer touted their purchase as a great investment, explaining that the best part of the Pet Union Dog Seat Cover to them is a surprise bonus feature: an opening for curious pets to pop their heads through to the front seat. “Probably one of the best investments that I bought for my new puppy,” the person said. “I made the right choice to purchase this great product as it cradles my puppy and protects the car seat. Best thing I noticed was the zipper in the middle for my puppy to stick his head.”
If you’re planning to hit the road with your pet any time soon, the Pet Union Dog Seat Cover is a must-have. Get yours for 15 percent off while the coupon lasts.
Tip adapted from travelandleisure.comiii
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Sources:
How might political events influence markets?
Governments’ Influence on Markets
How Is the Stock Market Impacted By Politics?
Disclosure:
Ballentine Capital Advisors is a registered investment adviser. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.
Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.
This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.
No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.
Advisory services through Ballentine Capital Advisors, Inc.
i https://www.golfdigest.com/story/good-tempo-golf-swing-experts-reveal-tips
ii https://www.delish.com/cooking/recipe-ideas/a42465446/corned-beef-and-cabbage-cheese-quesadillas-recipe/
iii https://www.travelandleisure.com/trip-ideas/pet-friendly-travel/pet-union-car-dog-seat-cover-amazon
