Author Topic: When political ideology hampers investing sucess  (Read 1492 times)

rob in cal

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When political ideology hampers investing sucess
« on: September 25, 2018, 10:33:08 AM »
   I wonder how many people out there have missed out on investment success due to political beliefs.  On the libertarian or rightwing side we have the gold people who believe that the US dollar will collapse any minute now due to the machinations of the Jewish/ Fed/illuminati/George Soros/international bankers/  conspiracy and also because there is too much debt because of welfare for lazy no good slackers. So it doesn't make sense to invest money conventionally because the Wall Street casino is rigged with fiat currency and due to implode in a few months at the latest.  These people think that Gold on the other hand has been around for centuries, a time tested investment that you can't wrong with, and experts think that in the next six to nine months its due for a historic rise, so get in now.
   On the left wing side we have people who think that the only way to be wealthy is to be born into it, the US capitalist system is rigged, based on anti-worker, anti-non-white evilness.  Capitalism is basically a way for evil white cisgender males to dominate others, and the little guy (unclear if that includes the tens of millions of white male working class people btw) can never get ahead and the rich get richer so no point in even trying. Forget about working a little extra to have some disposable income to invest, a few thousand extra every year will never amount to anything, even if compounded for forty years, because in the end evil corporate boards of directors and their Republican servants in DC will end up stealing the money anyway and give it to defense contractors and the top 1%. 
   The sad thing is in my own extended family I know of people who fall into both categories and have missed out on the last decades of investment sucess for reasons like this (maybe not this cartoonish, but going in that direction).

 

tct

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Re: When political ideology hampers investing sucess
« Reply #1 on: September 25, 2018, 11:17:57 AM »
I've witnessed this among friends and family. Although in my experience the two examples you mentioned don't always align with right/left wing ideologies. I will also add, I'm hesitant to try and convince them otherwise, for fear that I will be blamed in the event of an economic downturn or some other unfortunate event that causes someone to lose value in their investments.

SeattleCPA

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Re: When political ideology hampers investing sucess
« Reply #2 on: September 25, 2018, 11:38:05 AM »
Steven Pinker's book, Enlightenment Now, comes to mind as relevant here. And what I take away from Pinker's book is, we are all really guilty of cognitive shortcuts that damage or degrade our thinking in all sorts of ways. With some trepidation, therefore, I echo Bill Gates recommendation to read Pinker.

If you want a cliff notes version, here's my my blog about the book and takeways for small business owners:

https://evergreensmallbusiness.com/reading-steven-pinker-a-guide-for-entrepreneurs/

Mississippi Mudstache

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Re: When political ideology hampers investing sucess
« Reply #3 on: September 25, 2018, 12:07:35 PM »
I delayed investing in my IRAs last year until right before tax time. I think I put my money in the market ($11,000) on Feb. 2 - just barely missing the market peak. I had the money to invest 6 months earlier, and I'm self-aware enough to realize that my feelings towards our country's current political leadership had a lot to do with my reluctance to commit sooner. Luckily, I'm also logical enough to realize that a tax deduction is guaranteed money in my pocket, and I would never actually take money out of the market, or re-balance my investments, in response to my political beliefs. So maybe it cost me $1000 in lost compounding. Lesson learned, and a reminder to be more ruthlessly robotic with my investments in the future.

talltexan

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Re: When political ideology hampers investing sucess
« Reply #4 on: September 25, 2018, 12:41:40 PM »
I know a lot of people who kept their powder dry when Trump won, expecting there to be a disaster. I know others who did the same thing with Obama and with Clinton. The only guy who people were sure would bring a stock market boom was George W Bush, and his Presidency ended with a generational market drop.

None of us knows anything.

Mississippi Mudstache

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Re: When political ideology hampers investing sucess
« Reply #5 on: September 25, 2018, 01:12:27 PM »
None of us knows anything.

Exactly. The sooner you realize this, the more successful you'll be as an investor.

PizzaSteve

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Re: When political ideology hampers investing sucess
« Reply #6 on: September 26, 2018, 08:28:09 AM »
I did sell a great stock, because the company refocused on products I thought were unheathy and might have long term legal liabilities, but, sadly,  unhealthy americans scooped up the products in droves and the stock soared 10x+, after already rising 10x.   I made roughly 10x my initial investment (60k) but would have had a 100x bagger, worth roughly .5M if I hung on.  Those opportunties dont happen very often and take decades to pop.

bacchi

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Re: When political ideology hampers investing sucess
« Reply #7 on: September 26, 2018, 10:48:30 AM »
I know a couple who didn't want to invest in the rigged stock market. They put it all into real estate and have done well. It's more work than an index fund but it beats a tin in the backyard.

talltexan

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Re: When political ideology hampers investing sucess
« Reply #8 on: September 26, 2018, 11:18:22 AM »
Hope they settled into a growing area. the 100% in real estate thing seems like it could bite you if you pick a bad one and do not like long-distance management.

bacchi

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Re: When political ideology hampers investing sucess
« Reply #9 on: September 26, 2018, 11:51:26 AM »
Hope they settled into a growing area. the 100% in real estate thing seems like it could bite you if you pick a bad one and do not like long-distance management.

That's what I keep telling them.

They sold it all and moved into a smaller market and started over. The risk is greater there where a market downturn could turn the town into methville.

talltexan

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Re: When political ideology hampers investing sucess
« Reply #10 on: September 26, 2018, 12:00:55 PM »
They might have done other things to reduce their aggregate risk, though, such as decreasing leverage--implying a more favorable cash flow--as part of that move.

Mississippi Mudstache

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Re: When political ideology hampers investing sucess
« Reply #11 on: September 26, 2018, 01:43:54 PM »
Real estate is a good investment space for a skeptical investor. It's a decidedly non-efficient market due to lack of fungibility and difficulty of scale. There are deals to be had for competent people who are willing to put in the research and work required. Equities and bonds, on the other hand, are a killing field for skeptics. They simply require patience and resolve, and most who try to outsmart the market with the research and work that is so useful in real estate will find themselves lagging behind.

GuitarStv

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Re: When political ideology hampers investing sucess
« Reply #12 on: September 26, 2018, 01:55:44 PM »
I don't know anyone who fits into the two categories listed - they seem more like caricatures of people than the folks I know.

I've met some people who are kinda right wing who could easily retire, but choose to continue working because accumulation of money is more important to them than freedom from work.  I've also met some people who are kinda left wing who have taken jobs that don't pay well in fields that they really believe in (environmental / music / humanitarian and non-profit stuff ).  I know folks on both sides who give large amounts of their money and in an attempt to help others.

All of these things will slow your chance for early retirement.  None of 'em are my business though.  :P

harvestbook

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Re: When political ideology hampers investing sucess
« Reply #13 on: September 26, 2018, 02:52:56 PM »
I don't trust my opinions, feelings, or political beliefs when it comes to markets, because I truly believe the markets don't care. My guiding principle is that the future will be better than the past, or the cynical flip side, "It's a greedy world so I may as well draft off the greed of others."

fattest_foot

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Re: When political ideology hampers investing sucess
« Reply #14 on: September 26, 2018, 03:28:35 PM »
There are probably a dozen threads in various places on this very board about "What should I do with my money now that Trump will surely crater the economy."

If people here aren't above that, there's no hope for the masses.

mies

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Re: When political ideology hampers investing sucess
« Reply #15 on: September 26, 2018, 04:45:52 PM »
I don't know anyone who fits into the two categories listed - they seem more like caricatures of people than the folks I know.

You're lucky. I think a lot of us in the US have a dad, uncle, or some other acquaintance that gets all his news from AM radio cranks, Fox News, and sketchy unsubstantiated chain emails. My dad was convinced Obama was going to raid his 401(k), and if he didn't, Clinton was going to do it. I guess if you really believed that and didn't put any money in the market, you could really fuck yourself.

I still have the feeling we are watching a slow motion economic train wreck with Trump. It's unclear what his actions with these tariffs are going to ultimately do. I'm going to keep putting money in the market at regular intervals and take solace he can only be in office for 6 more years. If the market tanks, sweet, I get some cheap stocks. If the market soars, my net worth increases.

mjr

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Re: When political ideology hampers investing sucess
« Reply #16 on: September 26, 2018, 07:27:16 PM »
As someone not from the US, I watch in amazement at the obsession with Trump, whether the opinions are positive or negative.

E.g.

If the market tanks, sweet, I get some cheap stocks. If the market soars, my net worth increases.

This statement is inherently true, without the preceding Trump comment.
« Last Edit: September 26, 2018, 09:29:28 PM by mjr »

Radagast

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Re: When political ideology hampers investing sucess
« Reply #17 on: September 26, 2018, 08:58:34 PM »
https://www.etf.com/sections/index-investor-corner/swedroe-political-biases-can-impact-your-investing?nopaging=1

Not only that, the nation's [pleasant, polite description because using descriptive language to describe them is wrong] people have been found to get worse investment returns when their tribe is not in control. But actually, most people (including you, dear reader, and me) have no freaking clue on pretty much all topics. We would not know a good economic idea from a bad one, certainly not enough to base investment decisions on, and especially not after reading media coverage of it. So... knowing very close to nothing is OK and impossible to avoid, but at least know what you know. Also, I personally would think that profound losses relative to the market based on irrational political fears would make people step back and ask "what other irrational political fears do I have, now that is has been profoundly demonstrated to me that I am often wrong?" But no, everyone still thinks that irrational tribalism and self justification is moar better than making an improved life for themselves and everyone else.

Quote from the Swedroe article in 2017
Quote
It showed Republican confidence sentiment at 120. This figure hadnít topped 112 since 1952. For Democrats, the confidence reading was just 55.5, a level not seen since the last recession, when the economy was shedding 2 million jobs a month....Republicans apparently think itís the best economy in the postwar era, while Democrats seem to think itís the worst since the financial crisis.

obviously neither was/is true

and
Quote
...the strategy most likely to allow you to achieve your goals is to have a plan that anticipates that there will be problems, and to not take more risk than you have the ability, willingness and need to take. Lastly, donít pay attention to the news if doing so will cause your political beliefs to influence your investment decisions.

ketchup

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Re: When political ideology hampers investing sucess
« Reply #18 on: September 26, 2018, 09:10:55 PM »
Politics and daily news are bullshit, the president really doesn't matter that much, and the best course of action is always just to invest your money regardless.  Stick to your IPS if you have one, or just throw it all on VTSAX.

As talltexan and Ygritte said, we know nothing.

Get all fired up or whine about Turnip/Obama/whoever, but don't shoot yourself in the foot based on emotions and feelings that have no place in investing.

AccidentalMiser

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Re: When political ideology hampers investing sucess
« Reply #19 on: September 26, 2018, 09:18:37 PM »
None of us knows anything.

Exactly. The sooner you realize this, the more successful you'll be as an investor.

This. 

BTW, I'm fairly conservative and I hate gold.  I don't think the Jews (or the progressives) are conspiring to destroy the world or even the US economy.  I don't dislike immigrants and believe that all people are valuable.  I realize that there are people who are cranks on both ends of the spectrum but not everyone who doesn't watch the same news channel as you is a nutjob.

talltexan

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Re: When political ideology hampers investing sucess
« Reply #20 on: September 27, 2018, 08:36:21 AM »
Note: just because I'm claiming that Trump didn't give a signal about mean investment returns doesn't mean we cannot draw some conclusions about the variance. I suspect that some variance-type plays (such as based on the VIX) will increase over time. And this isn't just Trump: Brexit, emerging markets, Syria, there's a lot of unpredictability in the world.