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Avoid the Siren Call of Election Noise
09/25/2020 5:00 am EST
Election season is now in full swing and the country will soon select its next president, representatives from all 435 House congressional districts, 35 senators and 12 state governors, asserts Bruce Kaser, editor of Cabot Undervalued Stocks Advisor.
As we all know, this election has plenty of controversies, not only about the various candidates but also about a wide range of political and previously non-political-but-now-politicized issues.
These issues are real and the stakes are high. It’s easy to get caught up in the pre-election gravitational pull. And the closer we get to November 3, the more powerful the pull. By election day the news flow gravitational pull will be so strong that nothing will escape its overwhelming power.
To successfully navigate this abyss, it is critical to remember to separate political views from investment views. In the ideal investment mind, election-driven emotions play no role.
Rather, the mind focuses exclusively on the objective merits of each potential investment. In the real world, our minds mix together all sorts of emotions and investing ideas — and the accelerating gravitational pull of the election can cloud good investing decisions.
I once met a successful investor who made no investment decisions up to 45 days before any presidential election just to avoid these risks. Perhaps he was channeling the ancient Greek mythology hero Odysseus, who made his crew tie him to the mast so that his crew wouldn’t follow his commands lest the Sirens draw his ship into the rocks.
One way to help identify and weaken the emotional pull from the election is to ask, “Is my investment decision based on what I think will happen, or is it based on what I think should happen?” The should is probably based on the emotions, whereas the will is more likely to be based on reason. Either way, simply being aware of the risks is probably half the cure.
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