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I grew up in the South, so I know a thing or two about being polite.

Never ask someone how much money they make or who they voted for. Just smile, cross your legs, and say “bless your heart” when you want to absolutely rip somebody’s head off.

Well, friends. I’m an adult, this is my house and we’re gonna live by my rules.

And when we’re in these four walls of OptimistiCallie, we’re allowed to get a little loose and awkward.

Exhibit A. God, where are my manners?

Last week, there was a historic midterm election that dramatically shifted the balance of power in Congress.

In the House, the change in control was the most dramatic in over three decades.

It also stirred up a lot of feelings, judging by my texts and social media feeds.

Then, those awkward feelings spilled into the stock market. The S&P 500 – the index of America’s largest publicly traded companies – fell 4%, or the most in a year and a half on Thursday.

Suddenly, that elephant in the room is trampling all over your financial goals.

So let’s talk about exactly what happened here, and how politics actually fit into your portfolio.

Because nobody else in your life would dare broach these conversations with you.

The short answer: politics and investing are a toxic combination.

When it comes to your finances, it’s best that your vote stays between you and the ballot box.

Sure, your most passionate friends and family members will swear up and down that their politicians can move heaven and earth.

Take this chart of the stock market’s performance during different combinations of leadership on Capitol Hill.

A biased observer could draw all sorts of conclusions from it. Since 1950, the S&P 500 has returned 5.8% annually when Democrats have controlled both chambers of Congress and 13.8% when Republicans have controlled both chambers.

Obviously Republicans are better for the stock market, you think.

And then you vote with your hard-earned retirement savings.

The real trend, however, lies within the economy.

Here’s the same chart, with Congress leadership removed and economic crises added in:

The three worst Congressional terms for the stock market all coincided with recessions.

Turns out the real drivers of the U.S. economy — Americans spending money, businesses operating well — call the shots when it comes to the stock market.

Now, it's true that policy can affect the economy and, by extension, the stock market. And politicians set policy, of course.

I also think there’s some truth to the idea that markets thrive when policy isn’t in flux. Divided government tends to make legislation harder to pass, which can create a seemingly more predictable path forward.

Clearly, something about the midterms agitated investors this week. I’d call it a product of insanely high AI expectations more than anything.

AI is – and has been – a compelling story, but our dreams of LLMs organizing our entire lives have probably run a little too far. When the bar is too high, a minor obstacle can cause massive disappointment.

This is why it’s so important to understand how much your investments are tangled up in AI – and what your fallback plan is if we do see gravity pull tech stock prices back towards reality.

Elections aren’t usually the catalyst that makes you reconsider buying those Prada shoes or that pumpkin spice latte.

This week, I started as the director of investment strategy at Plancorp, a $10.2 billion fee-only advisory firm in St. Louis.

I'm joining the firm to help build its investment platform and expand its strategy and content offerings alongside my good friend Peter Lazaroff, the author of Making Money Simple and The Perfect Portfolio.

I talked a bit about this decision in my last newsletter. It all boils down to a phrase I learned from my mentor Barry Ritholtz: ministers without portfolios.

There are lots of pundits on Wall Street who speak freely about markets and the economy and crypto and Tesla without restraint, responsibility, or accountability. Many of them are smart voices with interesting perspectives that I respect.

There’s a smaller group of experts out there who talk about markets and invest on those views. Their words naturally carry weight because they’re representing a portfolio.

Strategy is about telling the story. Portfolio management is the story.

I want to do both.

A few years ago, I made the conscious choice to focus on the bridge between market analysis and money management in my career.

At Plancorp, I’ll be teaching advisors, clients and the broader public about markets, the economy and our thoughtful responses to the risks and opportunities we see in portfolios. I’ll also be involved in portfolio construction and the investment process itself.

There’s a whole post in me about the art and science of investment strategy, but I’ll save it for another day.

For now, you can catch me in your inbox every Monday morning, or work with me and my colleagues by scheduling a consultation with a Plancorp advisor.

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