Understanding public policy decisions is crucial to investment success.
This has never been more true. Government intervention is changing the nature of every business. As an investor, you need to figure out what is going to happen, and whether it affects the companies in which you own stock.
Over the last several days we have emphasized how easy it is to make mistakes in the minefield of politics.
We have some more mistakes to highlight in this series, but there is a positive side. We strongly encourage readers wanting to follow this approach to review the links above.
We are going to show how to figure out where to get information, and how to use it. Part of our success in client portfolios relates to a disciplined approach to public policy analysis:
We want to succeed no matter who is in power. We put personal opinions aside. We analyze the likely results, and figure out which stocks will gain.
It sound simple, but hardly anyone can resist the temptation to confuse opinion with analysis. Most of the current pundits are offering opinions about politics at the very time that stimulus dollars are starting to hit. This is good for their ratings, but bad for your portfolio.
They jumped the gun months ago picking "Obama stocks" on his inauguration. The earnings effects have yet to show. Meanwhile, companies have gotten lean and mean. Many are showing reasonable earnings even in a time of economic distress. Let us find these winning stocks.
As background, here is a recent article we wrote for TheStreet.com's RealMoney site. It is a bit introspective, but regular readers of "A Dash" may find it useful.
From RealMoney.com, 4/30/2009
When I started writing for RealMoney, I had an idea: I wanted to study how the nexus of politics, public policy and specific stocks could provide a big edge to readers. Almost two years ago, I launched a Web site, ElectionStocks.com, and hired some staff support.
