From Kendall Bauer
Dear Investor,
As a Milwaukee Bucks fan whose team didn’t make this year’s NBA playoffs, watching from the outside has provided an interesting perspective on sports fandom and human nature.
No matter the matchup, every fanbase seems convinced the referees favor the opposing team. Scroll through social media during any playoff game and you’ll quickly find thousands of fans pointing to missed calls, foul discrepancies, or controversial moments as proof that the system is working against them.
What’s fascinating is that both fanbases are watching the exact same game. Yet somehow, both sides often walk away feeling like they got the worse end of the deal.
Meanwhile, sitting above the court is the scoreboard. Points. Rebounds. Assists. Turnovers. The fundamental drivers of the outcome itself.
Of course, referees can influence moments within a game. A missed call can shift momentum, create controversy, or even impact the outcome on a given night. But rarely does it determine the fate of an entire season. Over the long run, fundamentals usually decide who wins.
Investors do the same thing. We watch the same economic data and come away with entirely different conclusions based on who’s sitting in the Oval Office.
I’ll admit — even working in this field, it isn’t always easy to tune out the noise of an election cycle. And I’ve sat across from clients over the years who have made emotionally charged decisions after an election didn’t go the way they hoped: selling out of positions when their candidate lost, or concentrating heavily into sectors they believed a new administration would favor. Those moves rarely aged well.
That’s what makes this particular bias worth understanding. When personal political beliefs begin steering investment decisions, attention shifts away from what has historically driven markets over the long run: the fundamentals.
Corporate earnings. Interest rates. Consumer spending. The labor market. Innovation and productivity. These are the forces that tend to move markets over time.
Political leadership and policy decisions can create real short-term volatility. Markets may react sharply to elections, policy announcements, geopolitical conflicts, or unexpected headlines. But historically, those reactions have often had a far smaller impact on long-term market performance than investors initially believe. The S&P 500 has delivered positive calendar-year returns in roughly three out of every four years for roughly the past century, through administrations of both parties, through wars, recessions, and crises that felt unsurvivable in the moment.
One of the clearest illustrations is consumer spending, which remains a major driver of economic growth and corporate earnings. Most people don’t decide whether to replace a vehicle, buy a dishwasher, book a vacation, or attend an NBA playoff game based on which party controls the White House. People spend money because they need something, value an experience, or are planning for their future. The broader economy continues moving forward regardless of political cycles. That’s part of the reason markets have historically delivered long-term growth under both Democratic and Republican administrations.
For long-term investors, that’s an important reminder. Markets tend to respond more consistently to economic growth, earnings, productivity, and consumer behavior than to political identity.
When making decisions about your financial future, stick to the data. Stick to the fundamentals. Markets will always react to headlines and elections in the short term. But over long periods, history has shown that fundamentals matter far more than who won the last election.
Recognize when emotion or personal bias is influencing your thinking. The next time a political headline makes you want to act on your portfolio, pause. Look at your plan. Look at the fundamentals. Then decide.
Your investments should reflect your financial plan, not your political affiliation.
Until next time,
Kendall