By: Matt Garrott
I started writing this commentary before the election, but held onto it since it will live most of its useful life (about 30 days until our next commentary) post-election. Not that I was going to make any predictions, but I expected to garner a few examples for my main point: control what you can control. We get asked what we think is going to happen in the future all the time. What will happen with the stock market? What’s going to happen with the election? Will the Guardians sign a power hitter? Our answer is usually some form of control what you can control. Don’t put your financial, mental, or emotional wellbeing at the mercy of betting on an event that’s outside of that control.
Today more than ever, we have access to oceans of data. Since it’s the story of the day, let’s look at the election coverage. National, state, congressional district, and county races are all watchable with results updated on the fly. The data is easily sorted by any metric you want. The top story for about 5 minutes was how the 6 voters in Dixville Notch, New Hampshire cast their ballots. How’s that for granular information?
How did the experts do? Political statistician Nate Silver ran 80,000 election simulations using the most advanced technology available. He came back with one candidate winning 40,012 of those simulations. Other experts herded around a toss-up result as well. About the only thing anyone agreed on was that the results would take several days to find out. The day after the election, we know this was all wrong. Remind you of anything?
Consuming economic and market data is like drinking from a fire hose, too. We can zoom out to macro-economic trends. We can zoom in on spending habits of 18-34 year old left-handed banjo players. And yet, experts draw opposing conclusions from the same data sets. Just as with political analysts, the most successful market prognosticators sound bold without making a call one way or the other. “Cautiously optimistic”, “Constructive on the market”, and “There’s a 40% chance that…” all really mean “I don’t know what’s going to happen”.
In four years, the pollster who got 2024 right through dumb luck will hit the talk show circuit with their “secret sauce”. They won’t have to be right or make any sense. They got it right last time. We see the same thing during every bear market. The permabears make the rounds on financial media along with the analyst who accidentally called the market top one time. They will say nothing of value to investors, but their remarks will likely be bombastic if only to ensure being invited back during the next bear market.
Our expert opinion: control what you can control. While we don’t make predictions, especially around politics, we are especially watchful of tax policy after elections. We will continue to work diligently for our clients to provide reliable value, navigating changes in the tax code and holding down fees where possible. We categorize the talking heads on TV or social media as entertainment, not education.
