The Devil You Don’t

Markets Hate Change…

more than bad news, more than good news, more than contraction or expansion, war, disease, hurricanes, employment numbers, it doesn’t matter.  Certainly more than the actual growth or decay of a company or industry.  Markets hate change.  Sure, any of the above can constitute a “change” at some point.  But then they go on.  The initial shock ends.  We stop being a country that, say “just declared war,” and start being a country that is “at war.”  Markets prefer the “at war” phase.  Why?  Because it’s predictable.  There’s a reason most investors lose money.  They take blind-stab guesses at the unpredictable.  “I think Janet Yellen is going to say ‘X’ and I’m going to make a bunch of money when she does.”  They place their bets, sometimes win, sometimes lose, and eventually run out of money.  While change can be the thing that makes and breaks massive fortunes, to get lost in the idea of making the wealth and ignoring the pitfalls of losing it claims more than it rewards.  Real money is made in the markets through the mundane, predictable nature.  And real market practitioners love stability.  So market’s fear change.  A friend recently mentioned a quote by C.S. Lewis, although I’m paraphrasing here as I couldn’t find it, so it could be misquoted.  The devil convinces us to fear the opposite of what we actually should.

So today, “the world changes.”  again…

Elections here in the U.S. will draw to a close in a few hours.  Either way, we will have change.  For months now the media bobbleheads have been touting this as the “most divisive election ever.”  And why wouldn’t they?  Listening to the debates sounded like two furious, divorcing parents fighting over who keeps the kids.  It was childish, insulting and embarrassing.  But most of America have picked their team; as if our political, legal, taxation, military, social security and healthcare systems are a sport to be cheered for and wagered on.  We love a good conflict, and inventing that space for us to cheer and boo is good enough for most of us.  Politics themselves are the modern-day bread and circuses to draw attention away from politics.  It took a few thousand years, but we’ve finally perfected it.  Use the topic itself to draw attention away from the topic itself.

What I find most interesting is that every friend, coworker and client I have is adamant about which of our two potential presidents they are “supporting.”  However, I only know 1 person who is actually glad they get to vote for one of our two primary candidates, and has supported this candidate since day one.  Most everyone I know doesn’t want to vote FOR either candidate.  Instead, they are voting AGAINST the candidate they dislike more.  Elections constantly promise growth and change, and never deliver.  You are toyed with and manipulated to think you have a real option, but we’re not given the options most Americans want.  So we settle into a cycle of “who do I hate the least.”  We continue to perpetuate the cycle, and then wonder why things get worse.  And now, in 2016 we’re stuck choosing between voting for someone that represents everything wrong with politics, or voting for someone that represents everything wrong with our culture.

That’s like saying, “I don’t like Bill Belichick or Tom Brady, but I live in Boston so I better root for the Patriots.”  Only worse.  Because this isn’t just a weekly sporting event, this is your taxes, expenses, income, laws, life.

Half of our country will go to bed tonight assuming we’re soon to digress into chaotic dystopia, while the other half will fall asleep assuming we finally have a chance.  A few months ago, most of those people would have assumed the worst had either of these candidates won.  The media can call this the most divisive election ever, that’s a catchy headline.  But I believe, if we all pay attention, this is really the most uniting election ever, because almost no one is actually going to bed, getting what they want.

So rant over.  The point I’m getting to is this.  Markets hate change.  It is likely a Clinton win is a continuation of similar policy as we’ve seen, and the markets have been calling for a Clinton win.  Although the email scandal gave some potential for a Trump win, and gave us 6 consecutive down days in the markets, as soon as the FBI came out Sunday and said no new evidence was found, the markets returned to the expectation.  The S&P and Dow are both up strong this week, and things will likely continue as usual.



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