The Trouble With Politics?

Over the past several months we have observed the transfer of power in the United States and how polarising politics can be. A study was recently published that looks at how investor behaviour interacts with political preference. It found that investors are more likely to take on riskier exposures (be optimistic about the domestic outlook) when their preferred party was in office, and the opposite occurred when the preferred party was out of office.

Although we enjoy political discourse, it reminds us that we shouldn’t let our political opinions get in the way of making money in the markets. ECCM’s trend following strategies are politically agnostic, removing the adverse consequences of cognitive bias from investment returns. Using a rules based trading process frees you and your capital from the risks of missing out on big market trends!

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