Political developments have dominated market commentary for much of the last two years. However, such commentary is often overly focused on short term considerations: trying to forecast short term price moves around elections, or considering which areas of the market will be the winners and losers from particular polices. In many ways events such as Brexit and Trump’s US victory have shown how misguided this approach can be.
As we have discussed in the past on this blog, we believe that the true importance of political developments lie in their longer term impact. In this video, Eric discusses the role of politics in influencing the investment regime and importantly how political change can tear up our conventional views on risk, correlations, and long term return properties of assets. A longer discussion of this topic can be found here.