Gridlock Is Good
Mother's Little Helper portfolio was UP today +318.00 (+0.27%).
Overall GAIN YTD: +$2,270.92 (+1.92%).
According to CNN Money our benchmark index, the S&P 500 is up +9.05% Year To Date.
Gordon Gecko Inspired Me
"Well, ladies and gentlemen, we're not here to indulge in fantasy, but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder. The Carnegie's, the Mellon's, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company!
The point is, ladies and gentleman, that grid-lock -- for lack of a better word -- is good.
Grid-lock is right.
Grid-lock works.
Grid-lock muddies the water, cuts out efficiencies, and provides certainty that nothing bad will happen, because 'nothing' will happen.
Grid-lock, in all of its forms -- grid-lock in fiscal policy, in monetary policy, in confirmations, and even knowledge -- has marked the quagmire that is American politics.
And Grid-Lock -- you mark my words -- will not only save the stock market after the mid-term elections, but that other malfunctioning corporation called the USA."
The Mid-Terms
The financial news is awash with predictions about what the mid-term elections will mean to the stock market. What will happen if the Democrats take the House? What if the Democrats win the House and the Senate? What if they don't?
I have some thoughts on the mid-terms as they relate to our stock portfolio,
1) We can't build a portfolio around political events,
2) If the Democrats take control of the house we will get grid-lock,
3) if the Democrats take control of the Senate we will get grid-lock. Either way, "Grid-Lock is good",
4) If you really want to know who will win the House, follow the money and check with the book makers. According to the top three bookmakers on American politics, the Democrats will win the House by a comfortable margin. PredictIt's numbers are so bullish you can probably stay home (that should get me an email or two).
Seriously, markets depend on certainty and while we want to rationalize that having a House and Senate that get things done is good for the economy and good for the country, history has shown us that grid-lock in Washington is just another form of certainty. I think we like knowing that politicians can't muck around too much if we know there's grid-lock.
But digging deeper there is nuance to grid-lock and that nuance shows up in the historical record. Fortunately, Sam Stovall, U.S. equity strategist for S&P Capital IQ has done a great job of analyzing this data.
During gridlocked years since 1901, the Dow gained just 4.06 percent, annualized. That compares with an average of 6.27 percent for all years and 7.88 percent for years without gridlock, defined as years when either the Democrats or the Republicans controlled the White House and all of Congress. In short, based on those numbers, gridlock has been a hindrance for the stock market.
However when we look at specific types of grid-lock we get clearer evidence that grid-lock is good. Paul Hickey, a founder of the Bespoke Investment Group, looked at the Dow Jones industrial average through every term of Congress since the start of the 20th century, such as a Democratic president and Republican control of both houses, the market has gained 10.32 percent, annualized. For all combinations of gridlock under a Democratic president, the annualized gain was 10.58 percent. Under a Republican president with gridlock, it was only 1.37 percent. Why? It could be coincidence. But Mr. Hickey surmised that “the market likes a Democratic C.E.O. and a Republican C.F.O.” The idea is that in general, the market has prospered under Democratic presidents, but prefers that their spending be curtailed by Republicans in Congress.
This Weekend Is It - I could use your help
Today I wanted to bring your attention to something other than the stock market, natural disasters and geo-political events. I'm speaking about men's health, specifically prostrate cancer and suicide prevention. The state of men’s health is in crisis. Men experience worse longer-term health than women and die on average six years earlier. Prostate cancer rates will double in the next 15 years. Testicular cancer rates have already doubled in the last 50. Three quarters of suicides are men. Poor mental health leads to half a million men taking their own life every year. That’s one every minute.
Click this link top donate
On Sunday September 30th 2018, tens of thousands of distinguished gentlefolk in hundreds of cities worldwide will don their cravats, tweak their mustaches, press their tweed and sit astride their classic and vintage motorcycles to raise funds and awareness for men’s health, specifically prostate cancer and men's mental health. I will personally be hosting a DG Ride in Murphys, California on Sunday September 30th. I will slip into my most dapper suite, and cruise my 1972 Norton Commando down main street. The bike is bright orange and very loud, perfect for gathering the awareness this initiative requires. This is the second year I'm hosting a DG ride in Murphy's CA.
While the ride is small, the purpose is great. Last year I rode alone, this year I'll be joined by four other riders and the contributions they bring.
Clay Baker DG Sponsorship page:
Lady's, remember all the distinguished gentlemen in your life; grandfathers, fathers, uncles, husbands, boy friends, cousins, brothers and sons. Your support is a gift of love to all those men in your life.
Please share my sponsorship page on your social media pages, Instagram, Twitter, LinkedIn, Facebook, Google, and email to friends or share any other way you wish.
The growth and support have been phenomenal because of people like you who say, enough is enough, let's make a change.
• In 2017, over 94,000 riders in 581 cities raised over $4.8M (USD) for prostate cancer research & men's mental health programs in partnership with the Movember Foundation.
• In 2017, Clay Baker, the sole rider & host in Murphy's California raised more money than all rides combined in China.
Please support Distinguished Gentlemen everywhere by contributing in any way you can. You can make a donation on my sponsorship page, register to join my ride, get out and cheer the riders in your area, or simply write some encouraging words on the DG Facebook Page.
Clay Baker DG Sponsorship page:
Stay Invested
Clay Baker
Disclosure: I am personally invested long in these stocks that appear in the MLH portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks that do not appear in the MLH portfolio: BA, BRK.B, CELG, CSCO, CTXS, CVX, DOW, DVAX, FB, IBM, NTES, NVDA, OMER, PFE, PG, RDHL, SCHW, THO, TWX, VEEV, VZ, XLNX, XOM
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.
