When Washington Squabbles Rule the Markets

Investor sentiment is the stuff from which market behavior is made. As one person commented on Twitter following Apple’s earnings report, “$AAPL makes 13 bucks/share, falls 30 points. $NFLX makes 13 cents/share, rallies 30 points.” It’s all in how investors interpret the market. And given that the rules for “qualified” investors are based primarily on wealth, those with plenty of money at stake are surely a good barometer of the investing climate… so a recent poll of their top concerns contains some valuable insight, right? Reuters reports:

Dysfunction in Washington is the top concern for wealthy investors, trumping fears about their ability to retire and the economy overall.

That is what UBS AG’s Wealth Management Americas found in a poll released on Thursday of over 2,000 of Americans who have at least $250,000 to invest. Similar trends were evident to many of the financial advisers – 19 in all – that Reuters recently interviewed about their clients’ current state of mind.

Much of wealthy clients’ frustration with Washington is centered on the end of 2012 “fiscal cliff” negotiations, which resulted in a last minute deal that raised taxes for the wealthy while maintaining lower tax rates for most Americans.

Washington politics to be investor’s #1 concern? Tax rates are clearly important, and government spending does amount to more than 20% of GDP… but for government to weigh more heavily on the minds of investors than the rest of the economy as a whole? If that’s not a warning sign to our politicians, we don’t know what is.

On one hand, we can’t really blame these investors. The dysfunction in Washington makes a great recipe for attracting eyeballs to news content, online or on TV. After being pummeled with episode after episode of our never ending fiscal crisis/reality TV show, it’s not hard to see why political bickering would top investor concerns. In the end, it becomes a self-fulfilling prophecy. The more investors watch Washington (and make investing decisions based on government policies), the more markets will continue to move in sync with those decision. Which, in turn, makes those decisions more important for investors to watch.

Can the cycle be broken? Well, perhaps if we had a long-term picture of what government policy was going to look like; if we could count on Washington to consistently make predictable, rational policy based on the best economic interests of the country; if posturing and pettiness from both parties took a back seat to compromise and responsible decision-making…

So, probably not.

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Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.

Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history.

Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.

Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.

Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.

RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.

See the full terms of use and risk disclaimer here.