Managing Money Amidst Chaos and Calamity
To say we live in “interesting times” is a huge understatement. I wonder if I live in an alternative reality like the movie The Truman Show. It is obvious I am not the only one assessing a world of distortions. We are all being manipulated in some capacity. From ministers, to politicians to advertisers—we are shown a version of the truth. This is true regardless of political affiliation.
The level of concern and anxiety has been elevated, but it follows a rhythm. Friends, family, and clients want to discuss the same things.
The first question is, “What do you think about what happened at the Capital,” followed by, “Do you think the president will be impeached?”
Obviously, everyone wants to know how these things will impact the financial markets.
Regarding what happened at the Capital, I have read and seen news reports. However, I am sure I don’t have the full picture. As for loss of life, that is just sad.
Impeachment is well above my paygrade and beyond my control. If something is beyond my control, I am not sure it is a productive use of my time.
Each day I become more skeptical of news reports, blogs or opinions. In all situations, there is “your truth,” “my truth” and somewhere in the middle is reality. Even then, reality affects all of us differently. As such, there may not be a singular and all-encompassing truth.
For these reasons, attempt to verify “statements of fact” from multiple independent sources. Opinions from friends, family or social media do not count as “investigative journalism.” When someone disagrees with you or poses a counter argument, take the time to understand their perspective.
The next query starts with, “Will the Biden Administration increase income taxes?”
I don’t know. It’s possible, but many things are possible. When any new administration comes into power they will consider and evaluate many options. However, just because something is discussed on the campaign trail or elsewhere, does not make it a law. Many things are thrown against the wall to see what sticks.
Even if I knew taxes would increase on corporations, dividends or individuals I highly doubt that changes the way we analyze or manage investments. Everyone should look for assets offering maximum productivity and profitability. Regardless of tax policy, this is always the case.
A corollary to the tax question requires an investor to assess the world Joe Biden will preside over. Biden inherits a world that is mad at everyone. Unemployment is high, and as of last month, getting worse. We are plagued by an uncontained virus. Things will improve, but not for many months.
If you are Joe Biden, what are you going to do? My guess is the new administration will attempt to facilitate the rollout of the vaccine as quickly as possible.
After that, Biden will focus on stimulating the economy and helping businesses stay afloat. That probably means more stimulus money, but not necessarily more taxes. More stimulus means more printing of money.
More printing of currency gives people money in their hands today, but devalues the U.S. Dollar. Stimulus and “free” money also light a fire under the financial markets.
Next, we are asked, “Company X is liberal or conservative. Should we sell them?”
If two people cannot come to a conclusion on politics, then it is erroneous to conclude that a multi-national with hundreds of thousands of employees are 100% of a certain political affiliation.
Our nation is a raw nerve right now. It is hard not to feel polarized. However, don’t let that impact your financial decisions. As such, emphasize the following:
- You can only focus on the things within your control. Making financial decisions based upon things beyond your control will not help you.
- You control where you live, where you work and how you spend your money.
- You are the only person that matters and the only one who can live your life. Your neighbor is not responsible for paying your bills or running your household.
- You do not control Congress or the Presidency. You do not make tax policy.
- You will be an intelligent investor if you follow Rudyard Kipling and “…keep your head when all about you are losing theirs….” Stay calm and rational—especially when it comes to your money.
- If you have a big decision to make or want to tell someone to kiss off, sleep on it. You can always tell someone where to go the next day.
- After watching the “news” for 30 minutes, you have learned enough. After that, go outside and play. Watching news programs for four or five hours will not help you better manage your life.