You know how Warren Buffett mentioned that if interest rates stayed at 2% for the next twenty years, stocks ought to be valued at 50x earnings, but if they average 5%, they ought to go to 15x earnings?
The political analogy is that some sectors of the economy ought to be valued a lot differently depending upon which political party controls Congress and the Presidency. Twenty years of Republican rule will give me a different valuation for defense contractors, pharmaceuticals, and heavily regulated industries compared to twenty years of Democratic rule.
The nuance is that sometimes Government does have some upsides for the corporations that I frequently discuss on the site. Namely, the use of regulations to create a barrier to entry for competition.
For example, Altria and Reynolds have created a duopoly resulting from the past three decades of smoking regulations, as the heavy litigation that resulted in the … Read the rest of this article!