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Do Conservatives or Liberals Make Better Investors?

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Conservatives, who tend to favor the market, often make the  case that they’re better investors and their policies are better for the economy. Liberals say they’re better investors because they are more globally aware than conservatives. They say they distribute wealth and that’s good for the economy.

So, who is right?

Neither.

To become the complete investor, you have to shrug off all  ideologies. When you trade or invest, ideologies can cloud your judgment.

Here’s how it works:

An ideology can cloud your judgment because it alters your perception of reality, often editing out vital information or inserting meaningless information that conflicts with your world views or political views.  Here are some examples:

An Obama supporter may hope the economy under his guidance will improve. When things get rocky, the liberal investor might place bets blindly in “Hope” and “Change,” acquiring positions in wind turbine companies and other segments of the green economy that the president is always touting. Could these include crappy companies that will dive to nothing? Yep.

Conservatives, on the other hand, will see only bad things coming from the Obama presidency. They’re betting on a lower dollar and higher gold. Could this cause them to miss a potential economic boom? You bet.

“Social conformity drives human beings. Even if the group is wrong, people go along.”–Trend Commandments, Michael W. Covel.

This isn’t to say that government policies can hurt or help the economy. They can. However, the idea that complete economic destiny is held in the government’s hand is wrong. It is a magical belief that’s becoming more widespread. Just like ancient people believed certain rocks or stones could control the weather or protect them from misfortune, people today believe that a bunch of human beings who occupy certain offices in a certain town can control their own economic destiny.

While the federal government does dominate 20 percent or so of our economy, it does not control everything. Certainly, world economic conditions can affect us. You, as a consumer and investor, can move markets. Weather. Technology. Business investment. All these factors–and dozens more–have a chance to change our economy for good or ill.

This is another way emotions can ruin trades.

By focusing on one set of economic inputs, your investments could be based on a faulty trajectory and like an arrow that is only a few millimeters off the mark a few yards down range will be completely off the mark as the arrow reaches the target.

The lesson: Don’t invest as a Conservative or Liberal, invest as an astute trader.

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