We Invest in Companies, Not Politicians

Photo by Library of Congress / Unsplash

I find that most investors spend a lot of time worrying about something politicians may or may not do. Whether the topic is the debt ceiling, immigration, tax reform, or anything else, the universal fear is that politicians will steer the country in the wrong direction for their own political gain.

Fortunately, as I try to remind anyone with similar concerns, we don’t invest in politicians. We invest in companies.

This is a huge and important distinction. “Investing in the stock market” means we are taking an ownership interest in some of the greatest, best-managed companies in the world. If a politician does something to screw things up (which they often do), the companies we invest in won’t simply give up. They will find ways to navigate the new environment and keep making money for shareholders. 

When Russia invaded Ukraine, companies like Mcdonald’s stopped doing business in Russia. When local law enforcement issues become a problem, companies like Whole Foods, Walmart, and REI have all closed locations to better protect their assets. If the US market were to become unfavorable for business, US-based companies would move operations to other places. If politicians fail to create a favorable environment for businesses to prosper and grow the economy, those politicians will eventually be replaced.

Things in the country may not always seem perfect, but the future remains incredibly promising. To reuse the Warren Buffett quote from last week’s note:

“I have been investing for 80 years – more than one-third of our country’s lifetime. Despite our citizens’ penchant – almost enthusiasm – for self-criticism and self-doubt, I have yet to see a time when it made sense to make a long-term bet against America. And I doubt very much that any reader of this letter will have a different experience in the future.”

We live in a country where new ideas, new companies, and new opportunities are created daily.  We will one day live in a world that has made tremendous advancements in healthcare, artificial intelligence, self-driving cars, and fusion power. My kids go to school with classmates and teammates that are smart, talented, and ambitious – far beyond where I was at their age. They will be responsible for innovations over the next decades that are far outside anything I can imagine.  Companies that fail to change and improve will be replaced by companies that do things better. This is what we invest in when we invest in exchange-traded funds that spread money across the stocks of the greatest, best-managed, companies in the world. 

It remains our sincere belief that the words of pessimists will continue to dominate the headlines, and financial prognosticators that repeat negative talking points will continue to sound smart, but in the long term, it will be the optimists that make money.