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Angry voters make money managers nervous. After all, they're paid to worry about the risks to their clients' investments, and the presidential elections are a big worry.
“Does it matter? Yeah, it matters a lot,” says Michael Farr, president of Washington, D.C., investment firm Farr, Miller & Washington.
Farr was one of several panelists who spoke to a gathering of the CFA Society of Naples at the Ritz-Carlton Beach Resort in Naples Jan. 28. The group of money managers organizes a forecast dinner every January that brings together the region's top financial advisers for some crystal balling.
“I hope we don't pick a president just because we're pissed,” Farr quipped in response to a question about the rise of populist candidates.
Candidates who say disparaging comments about banks and health care companies have the power to move the stocks of companies in those industries. “It sets the tone for the country,” says Kenny Polcari, director and vice president at O'Neil Securities.
Perhaps just as worrisome is what the Federal Reserve plans to do this year in the face of slowing growth worldwide and a glut of inflation-suppressing oil. Just a few months ago, many analysts were expecting as many as four quarter-point increases in short-term interest rates in 2016.
“We're lucky if we get one rate hike” this year, says Polcari.
Unlike previous market volatility, the Federal Reserve hasn't yet stepped in to prop up declining asset prices by lowering interest rates. “We don't think the Fed has the guts to stay out of the way, but we'll find out,” says Farr.
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