Post-election Reflection

Interestingly, the electorate seemed to move to a more moderate posture with the election of Chris Christie in New Jersey and Andy McAuliffe in Virginia.  While the Tea Party has been prominent and in focus over the past several months the party was unable to elevate their favored candidates to the Governor’s mansion.  Investments are similar.  Companies, sectors and countries make headline news, garnering favor or getting harshly criticized for periods of time only to swing up and down, revert to the mean and have a more moderate impact on long term returns.

Locally, Charlotte elected four democratic at-large candidates and a democratic mayor.  Democrats now hold a super majority and will influence the way Charlotte spends its tax dollars.  Regardless of state and national trends, Charlotte leaders will react to local influences.  They will debate, tax and spend as their constituents demand and our community will change accordingly.  If effective, they will balance their constituent wants with community needs.

Like a political leader’s constituents, investment decisions are often influenced by personal wants.  Similarly, impulse, fear and greed (Tea Party politics, in and out of favor companies, sectors and countries) can play prominent roles in investment decisions without regard to the big picture and the high probability of reversion to the mean.  Before making investment decisions you might later regret, consider your needs versus your wants and whether you are being unduly influenced by recent news.  Reflect on short term trends and whether they have staying power or will be short lived.

Resist the urge to swing to extremes.  Rebalance regularly and recognize nothing will stay in or out of favor forever.