“No Room for Politics in Your P&L”
Markets don’t care about your party
Financial markets do not care about your partisan loyalties or ideological identities.
How Political Bias Distorts Your Decision Making
Research shows that political preferences significantly alter expectations of stock market performance.
These distorted expectations appear in predictable ways:
After elections, people who support the winning party become more optimistic so they increase their risk in the markets.
And when investors find their preferred party out of power they expect economic deterioration and market crashes so they respond by reducing equity exposure or shift into defensive assets.
But long term market data shows that equity performance are broadly similar across political administrations. These pessimistic reallocations therefore represent unnecessary and costly reactions to beliefs that have little basis in historical outcomes.
Other Ways Political Beliefs Lead to Bad Investment Decisions
Investors overreact to political events
Political events can trigger portfolio shifts despite having no impact on market fundamentals.Ideological framing distorts policy interpretation
Policies are judged through political identity rather than financial relevance.Political identity alters data interpretation
People view identical economic indicators differently depending on which party is in power, impairing objective analysis.Negative news is weighted more heavily when the opposing party governs
Investors become overly cautious and reduce exposure unnecessarily when they dislike the current administration.Political narratives distract from fundamentals
Attention is diverted to partisan stories that have little connection to cash flows, valuations, or returns.Political volatility is mistaken for financial volatility
Investors confuse political drama with events that matter for markets.Political beliefs encourage crowded trades
Large groups of like minded investors take similar positions at the same time, producing poor entry and exit points.
Why These Biases Support Allocating to CI Volatility
For investors who recognize that political beliefs can cloud judgment and lead to poor decisions, allocating to a disciplined, rules-based strategy like CI Volatility offers a way to maintain objectivity.
By removing political influence, CI Volatility helps investors avoid common behavioral errors and preserve long term performance.