Stock Investing For Dummies, 6th Edition

Chapter 15

The Big Economic and Political Picture

IN THIS CHAPTER

Looking at the effects of politics and government on stocks

Checking out a few handy economic and political resources

Even if politics doesn’t amuse or interest you, you can’t ignore it. The point is not whether you vote for or against a particular candidate; the point is that you vote for or against their policies and legislative agendas. You don’t vote because the candidate is Mother Teresa or Attila the Hun; you vote not only for the policies that will ultimately govern your life (career, business, and so on) but primarily for which set of policies will generate the greatest economic good, which in turn can set an environment for your stocks (those underlying companies) to succeed or not.

What people must understand (especially government policymakers) is that a new tax, law, regulation, or government action has a macro effect on a stock, an industry, a sector, or even an entire economic system, whereas a typical company has a micro effect on an economy. The following gives you a simple snapshot of these effects:

Politics → policy → economy → sector → industry → company → stock → stock investor

This chapter doesn’t ...