Brian J. Murphy, CIMA®
Senior Vice President, Chief Investment Strategist
[email protected](585) 419-0670 x41933
Political dysfunction is not anything new, here in the U.S. or in any other country. But adding to the issue
is the fact that congress, like our country, is very narrowly divided, leading to an environment where just
a handful of malcontents on either side can cause significant disruption in the day-to-day functioning of
government.
Congress has until September 30th to pass the necessary spending bills to fund the government, or a
continuing resolution to buy themselves more time. If they fail to do either federal workers will begin
missing paychecks, and others in nonessential areas may be furloughed. Aside from the financial
disruption that takes place for the millions of workers affected, this creates a financial drag on the U.S.
economy.
So, the question is whether investors should react by making changes to their portfolios or doing
anything different with near-term financial decisions. The answer is no. These dramas have taken place
in the past, and will likely continue to take place, potentially with more frequency, going forward. But
just like past episodes they are short-term issues, potholes in the long road of investing. Serious investors
with well thought out long-term goals should not be distracted by short-term problems. Take heart, since
1980 there have been fourteen government shutdowns, and over that period until the end of last month
the S&P 500 has returned a cumulative12,794%*.
*Source: Zephyr Analytics/Informa