America’s presidential election is coming up next week. Yet the results of the final ballot count won’t impact the stock market as much as you might think.

Our friends at Ycharts make a convincing argument that the S&P 500’s overall returns aren’t very correlated to the political party who’s in office. Dot com bubble bursts, technology innovation, and COVID pandemics don’t pledge Republican or Democratic allegiance. In other words, if you’re buying or selling stocks based solely upon who wins the election next Tuesday, you’re probably overthinking it.

But bigger picture, the role of government does potentially have a stronger influence on the investing world. Politicians can impose regulations, negotiate international trade agreements, influence interest rates, or enact taxes and subsidies. These actions can, in turn, benefit or hinder certain segments of the market and even individual companies.

In this month’s 7investing Team Podcast, our advisors each describe how the role of government influences our investing style. We also throw in a bit of speculative fun, each sharing one company who’s on our radar that could be impacted by November’s upcoming election.

Publicly-traded companies mentioned in this podcast include Amazon, Cerner, Facebook, Microsoft, NextEra Energy, Tesla, and Twitter. 7investing’s advisors may have positions in the companies that were mentioned. 

Timestamps:

00:00 – The impact of presidential elections on stock market returns

02:04 – How government impacts our investing style

05:04 – Dan: Regulation of social media companies

09:45 – Maxx: Geopolitical impacts on global supply chains

16:32 – Steve: Ignore the short-term & focus on business fundamentals

18:43 – Simon: Subsidies and regulations spurring innovation

26:12- Austin: Prioritize on long-term business performance

33:58 – Matt: The impact of regulations on banking

Complete Transcript

Simon Erickson

Hello everyone and welcome to this episode of the 7investing podcast. Here at 7investing, we’re here to empower you to invest in your future. My name is Simon Erickson, I’m the founder and CEO of 7investing. I’m joined by my fellow lead advisors at 7investing: Maxx Chatsko, Dan Kline, and Steve Symington. Gentlemen, happy almost Halloween!

Dan Kline  

Hi! I’m going through costumes as fast as I can. I’m somewhere between Sad Elmo and the clown from It. I can’t decide.

Simon Erickson  

Looking forward to seeing which one of those you choose Dan! We’ll also be joined later on in the program by Austin Lieberman and some thoughts from our other lead advisor, Matt Cochrane. But the question on everyone’s minds right now is the election that we have coming up next week. And what is this going to mean for the stock market. And so we’ve compiled some research from our friends over at YCharts, which actually, surprisingly, as it might be, says, it doesn’t matter who is in office at the time. The business world is going to do what the business world is going to do. There’s a lot of speculation that Republicans are good for the economy. But we saw George W. Bush’s go through the.com, and the 2008 financial crisis, totally irrelated to the President himself. And then also, Bill Clinton, and President Obama, two Democratic candidates had two of the greatest stock market returns during their tenure. And so we’re going to include that information from YCharts, it was really kind of eye opening. But I kind of want to open this up to the team to talk about not just in terms of elections, not just in terms of politics, but also in terms of government. Because we do think that government could have a larger impact on the stock market and the business world at large, whether that’s trade agreements, whether that’s political agendas, whether that’s interest rate decisions, or something else. And so, Dan, we’ll start with you on this. But the question that I’d really like to pose to the entire team is, what role does government play in your investing process and your investing strategy? Go ahead, Dan Kline, please go first.

Dan Kline  

Yeah, so it’s very little, because the reality is, government’s not looking to hurt business, you know, and it when we’re looking at the two candidates, Joe Biden is a very, very pro business moderate. Is he gonna make some changes around the edges? Absolutely. Might there be some capital gains? Tax changes? Yeah, for the richest of people. But the reality is, when it comes to regulating business, I actually think the biggest government danger is their inability to understand. So let’s look at an area I cover, and that’s cable television. The FCC doesn’t directly regulate cable, they regulate broadcast networks, but they don’t really understand their market and sort of how anything works. And if you remember, the days back when, like Howard Stern was fighting the FCC, it’s really like a bunch of old men in a room, even if they’re not a bunch of old men who don’t understand. And that’s what we’re seeing with the social media regulations right now. You know, it’s really difficult to argue monopoly, even in places where it’ll look, does Google dominate search? Absolutely. But are there other choices? Yes, there are. Are there other ways to get information? Absolutely. So I do feel like government can do harm with things that it doesn’t understand. Right now, that’s technology, which is being demonized. That could change to something else. So I generally want industries to self regulate, like we’ve talked about this before. My family’s in the ladder and scaffolding business, and the ladder and scaffolding business ladders are, are regulated by OSHA, OSHA standards are written by the industry. So my father would write, say, a standard for wooden step ladders, and then the rest of the industry would debate it, and in most states, if you all agree to a standard, that standard becomes the law. And if you meet the standard, you don’t have any liability. That’s not true in every state. But so you know, you engineer your ladder. So a 300 pound rated ladder can take 1200 pounds, you did all the tests, somebody weighs 1400 pounds and breaks your ladder, they can’t sue you. That’s what I’d like to see the internet be doing. That’s what I’d like to see all the social media, all the digital companies come up with some standards on data use and sharing and privacy. I mean, we know you mention a product and somehow Facebook knows you mentioned it and it starts showing up in your feed. We’ve all had the creepy ads. Some of that stuff has to be regulated, but I’m not overly-I have a lot of concerns about government. But I’m not overly concerned about government’s impact on business, because look, we all want jobs. we all we all want more people to work. It’s really the more they get involved, the more harm they tend to do.

Simon Erickson  

It makes a lot of sense, Dan, especially the point you said about how self regulating would be the best outcome probably for social media companies in the internet at large. Do you think that’s the most likely outcome, or what do you expect will happen? And what impact will that have on those companies?

Dan Kline  

So I think we need to get rid of the political rhetoric. And that’s difficult to say there’s a bias against conservative media, there’s a bias against liberals, whatever it is. The problem is like, so Facebook and Twitter have taken some pretty big steps to create, like internal boards and content standards and rules. And it’s really, really tricky to do, because some of its judgment, you know, what is my article that’s an opinion piece on a certain company? Is it biased? Well, it’s inherently biased. It’s an opinion piece, like, but should it be labeled an opinion piece? Of course, it should be labeled analysis or something like that. How do you exactly regulate that, like, a fact is a fact? You know, it rained two inches last night. Now someone might say, well, 100 feet away, it rained 1.998 inches. All right, that but a fact is a fact. Some things just aren’t facts, they are opinions, or there’s gray area or there’s room. And it’s really difficult if I’m, you know, posting something on Twitter to decide exactly when I’m wrong. That said, there’s also some of that old “well, when something’s really wrong. I know it’s wrong”, where we could be doing a lot more to take down misinformation. Well, there has been a ton of misinformation about the pandemic. I mean, how many people saw memes about like, you know, how masks cause you to breathe in carbon dioxide. And then like every doctor on Earth, who wears a mask all day long, came out and said, well, that’s that’s not true. That’s not how it works. And Facebook and Twitter, were not quick to take that kind of misinformation down. So when we can’t even agree on who the experts are, all of this becomes really tricky. But I do think it has to be industry done. Because I don’t know about you, Simon. But do you have a lot of faith that Nancy Pelosi and Mitch McConnell in two people on two other sides of the aisle, but they’re big, like Instagram users that they’re like, totally understand the inner workings of Facebook? These are people who call it the face place or Tweeter, like these are not technically savvy people. And look, there are technically savvy older people. My my wife’s grandfather at 99, was paying all his bills online and knew how to do. But Congress doesn’t strike me as those people, so it feels like technology should regulate technology. I don’t know if you do it with independent tribunals, or there’s all sorts of ways you can put it together, but it shouldn’t be government.

Simon Erickson  

Steve, did you want to chime in on that any statement about what Dan said?

Steve Symington  

See me itching? I was thinking about it brought to mind those, the congressional grillings we saw was it last year, where Congress basically proved they didn’t understand, you know, they’re, they’re like, why on my iPhone, he’s like, well, we don’t make the iPhone, this is the CEO of Google. And then, you know, the infamous senator, we run ads moment when they asked how Facebook can be free. And it’s just yeah, so that regulation kills me. But I think it’s important to note too, that most of these executives had said that they are for regulation, as long as it’s the right kind of regulation. And that’s not a as long as we can make sure it’s in our favor kind of comment. They say, well, if we want regulation, we want it to be properly built so that it makes sense. And and and I honestly don’t think they’re trying to be self serving in those comments.

Simon Erickson  

It certainly aligns with the Department of Justice said just a couple of weeks ago when they said, “hey, the balls in your court to police your own sites, the terms and conditions of the site, whether it’s Facebook, whether it’s Twitter, whatever is in the hands of the platform that’s running that site, it’s not going to be overly regulated.” So great. Great points. Go ahead, Dan.

Dan Kline  

Let me close out with you know, there’s obviously a lot of political theater here. But silly. Let’s look at Amazon. Oh, Amazon is so powerful. They dominate retail, and they have AWS. Well, AWS competes with Microsoft, it competes with IBM, it competes with two or three other big players. Amazon, the store competes with Walmart and Target and Best Buy. It’s really hard to argue you’re a monopoly, when you have really big competitors. Like if I said McDonald’s is a monopoly, you’d say, what about Burger King and Wendy’s? And I’d say yeah, no, McDonald’s is a monopoly. Like, it doesn’t make any sense. So I think there’s a lot of arguments here that are really just about making points, and I don’t see any big move to break these companies up, you know, or, you know, or really to make big changes. I do think we’re gonna have endless, you know, meetings on it, because it looks good. And in a lot of people look, Facebook, Twitter, Amazon, they’ve angered a lot of people at various points. So it is sort of like good show to take them to task from both sides of the aisle.

Simon Erickson  

Yeah, great. points. Dan. Maxx Chatsko. Let’s pull you into this conversation. We just published a piece, a written piece to all of our subscribers last week on this very topic. You talked a lot about a lot of geopolitical factors that we might not be thinking about. What is the role of government on your investing process?

Maxx Chatsko  

Yeah, I knew everyone was going to kind of stay domestic. So I went bigger and went international on you guys, because I mean, how much more can we talk about the election in he US, right? So something that’s really…

Simon Erickson  

A lot. The answer is a lot we could, but please continue.

Maxx Chatsko  

(Laughs) Apparently so. Yeah. So a few years ago, I read a couple books by Peter Zion, and he just released another book last year. So he’s a geopolitical expert. And he really opened my mind to a, what is geopolitics and b, oh wow, this is crazy. Once you kind of understand and see all the pieces come together, it kind of opens up this whole new area for analysis, a whole new way of thinking and seeing the world. So I guess, the way to start is that, you know, at the end of World War Two, the United States had an intact economy and an intact Navy. And we went to all the allies who were rebuilding, and said, Hey, guys, there’s this thing called the Soviet Union, we’d like to contain it. So we’re gonna defer to you guys on economic matters, you can export all your stuff to our consumer market. And we’ll guarantee trade routes. So historically speaking, this was insane. The allies couldn’t like sign it fast enough. Right. So this is called the Bretton Woods agreement. And this led to what is now the global order, right, we have globalization of supply chains in 17 different countries, or whatever it might be. And most investors alive today, including all of us, don’t really have a, you know, appreciation for how things could be different, right? We’ve always had this system in place. So you know, the problem with that, though, is that the Soviet Union, of course, collapsed in you know, 89, 90, and then the US didn’t update that policy at all, we basically have no foreign policy for the last 30 years. And we’ve started to see that kind of manifests in weird ways, right, even domestically, but some, you know, social unrest. Now, political instability, economic inequality, a lot of it kind of ties back into, you know, the global order, and us kind of taking it on the chin economically, to differ on defense issues. So, you know, how does it start to impact investing? I mean, I have no idea, but I think it’s something that people should start to watch. In terms of, you know, for most of our lives, most of my, or all of my life, as a, you know, as a millennial, you know, geopolitical consequences, advantages, disadvantages, didn’t matter. They were put on hold. And now that’s starting to not be the case anymore. So we have to start to think about, you know, does it make sense to have, you know, international supply chains? Are there risks to that now? If different countries are there’s different bickering between different countries, I mean, the US and China, I don’t think it matters, who wins the election coming up? I think China is going to be in the doghouse among the West, for, you know, the next decade at least. And you know, that could really go down in some weird sideways ways for investors. I mean, are companies going to get delisted from the American Stock Exchange, if they’re based in China, are companies is going to be allowed to operate so freely in China. I mean, I don’t know, right? It’s kind of crazy. But that’s one of the things that if it goes down, and you can kind of see it coming now, you know, it’d be a terrible thing to have kind of surprise you later, right? I mean, look at this year 2020. Right. Now, it would be thought we’d be here on January 1. So things could happen that you don’t think, you know, might happen. But you know, one example just to wrap this up, is Tesla, you know what their Battery Day just a couple weeks ago, they were talking about, hey, guys, we’re gonna start mining lithium here in the United States. Like, that’s a crazy thing to say. The United States doesn’t even make lithium today. Right? All the things made in Australia and South America, there’s some in China. And you know, it’s like, why are you doing that? It’s kind of weird. Well, I think it was move to kind of contain some of the geopolitical risks that Tesla sees on the horizon. You know, China consumes over half of the world’s lithium, so it has a big thumb on the scale of prices, boom and bust cycles in the market. And you know, given how things are going, that might be a terrible idea if you need to consume a lot of lithium, as Tesla does. So containing the supply chain within the United States might make a lot of sense, you know, if there’s a big bust or boom in the market, internationally, but Tesla can source at least all of its us consumption within the US, then it’s insulated from that doesn’t have to see crazy price spikes, and everybody would be insulated. Go ahead, Dan.

Dan Kline  

Next, we have a big supply of lithium that we just weren’t mining, like it feels like you’d mine it where it is like,

Maxx Chatsko  

Yeah, so the US has a lot of lithium, we have different deposits, they’re clay deposits for the most part. So there’s a lot in Nevada, for instance, and then there’s some in the Carolinas. And like, some of it’s just we haven’t developed it because our mining industry is not that big or different regulations. But if you look at North America, you know, the US has a ton of lithium we could be making you might be a little more expensive. But again, maybe that plays like bounces out with the risks. And then you look at Canada. I mean, Canada has a lot of nickel, and Cuba has cobalt. So like we have all the things we need to make batteries right here with our own little circle of the world. So, you know, might not be a bad idea to explore some of that.

Simon Erickson  

Yeah, Maxx, you mentioned global supply chains. And you also mentioned technology companies and China. So if I can connect the dots of all of those we’ve seen some companies getting banned from the United States Tic Tok and Huawei for national security concerns. We’ve seen others delisted from the NASDAQ because of accounting irregularities. Do you have any concerns about these large tech companies that have outsourced so much of their supply chain to China?

Maxx Chatsko  

Yeah, I mean, I just personally, I don’t think…. this sounds crazy. I always sound like a crazy person when I talked about this, right? I don’t think China’s a sustainable superpower. I don’t even think it’s gonna be a regional superpower. I mean, it can’t source its own food for its population, doesn’t have its own energy. It can’t guarantee its own trade. It has a really weak Navy and Air Force. I mean, there’s a reason it’s building islands in the South China Sea. It can’t project power that far from its borders. Right? So like, I mean, it could be balled up pretty easily by like Japan, which doesn’t even own a Navy technically speaking, right. But yeah, so I mean, companies that chase China’s growth, I get it. I see it. There’s a lot of people these giant markets, giant middle class. Yeah, it just makes me feel queasy. I don’t like it.

Simon Erickson  

Great, great points that I would Steve, any comments on Maxx’s comments there?

Steve Symington  

I feel like every time Maxx speaks that “The More You Know” star is coming across the screen in my mind. It’s like, Oh, I didn’t know that. That’s rad.

Simon Erickson  

Those are some great points. Maxx, by the way, info@7investing.com if you think Maxx is crazy, or you want to chime in about the the comments he made about China. Definitely a great perspective on that, though. Steve, let’s let’s come to you, how does government influence your investing style?

Steve Symington  

I try not to let it, I guess is the short answer. I had the opportunity back in August to interview Chris Mayer. He’s the author of “100 Baggers,’ and the founder Woodlock House Family Capital. And 100 baggers is a fantastic book about finding stocks that return 100 times your initial investment. And one of the things that we highlighted in that podcast back in August was that I’m going to read a quote from Chris on some of the things they had in common. He said most of the stuff that you read about the economy and forecasts and what GDP did, what the latest unemployment number is all that stuff you can probably safely ignore. You look at these past hundred baggers, and you could see how those kinds of concerns they didn’t really matter. They just plow through all these things. And over a period of decades, it doesn’t matter. And I mean, that’s really on base. And those are the kinds of businesses that we’re looking for when we’re actually searching for recommendations at 7investing. And that’s something I think is really important is the kinds of businesses that you search for. Now, that doesn’t mean that you won’t see government and specific policies on trade impact your investments. You know, there’s a lot of companies that had profits, compressed because of tariffs or, you know, certain trade policies, for example. And those are things that you definitely have to keep in mind. But they aren’t necessarily long term concerns all the time. So it’s just something that can temporarily hold things back, create buying opportunities, those are the kinds of things that I try and keep in mind. But as far as you know, specific administrations or politics in general, I try to find businesses that will succeed, regardless of who’s in power. And sometimes that’s not easy. But when you find them, those are the businesses that can continue to survive and thrive no matter what over the course of decades.

Simon Erickson

So we might get a little too hung up on the short term, the current administration, the current policies, but in reality, we should be looking for the businesses that are standalone without any of that playing into the equation.

Steve Symington  

Yeah.

Simon Erickson  

Yep. Great points. Steve, I’m going to take it in the completely opposite direction, I’m going to go 180 degrees opposite of what you just said for my segment and say that I want to talk a little bit about the role of subsidies and and also regulations and how this can impact not even necessarily individual companies, but pockets of the economy. And I gave two examples of this. One was my previous experience, which was in renewable energy. Before working, but 7investing in several other roles was developing renewable energy projects for one of the largest oil companies in the United States. And just the role of a subsidy is intended to fund the RND of smaller companies to make certain pockets of that market more competitive with existing infrastructure and existing technologies. And so from a perspective of someone who’s developing solar power projects, this was increasing the solar panel efficiency. And of course, now in certain regions of the United States, you’re starting to see solar panels deployed as a power source that are competitive with natural gas production and the rest of the United States. And so that was really made possible by a lot of those subsidies, a lot of those R&D tax credits and then the tax credits for once they actually got up and running to make them more economical. So that’s a political agenda that didn’t just impact certain companies, which it did. But now you start seeing solar applied everywhere. California is mandating new buildings have solar panels. And there’s a rush for the infrastructure for solar, the solar economy. There are kind of second level impacts that came from that. And the other example that I give is in the medical industry, the High Tech Act of 2009. This was something that mandated that hospitals would adopt the meaningful use of electronic healthcare records. And if they didn’t, they would face hefty fines. And the first wave of this was everybody was talking about the centers, the Epic systems of the world, the people that were benefiting from those EHR, electronic health records being deployed at hospitals. But this kind of also opened doors to data in the medical industry, which was very slow to adapt data, you were used to kind of having checkmarks on pieces of paper, you know, that were held in a file or behind the clerk at the front of the hospital. And now you start seeing AI being deployed much more in the healthcare industry, and much more in the industry, and the medical industry as a whole. And so I guess it’s like my to wrap this all together, I’m interested in subsidies and regulations, not even necessarily because of the first wave of companies that benefit from them, but the second level impact that they have on larger industries. And I wanted to wrap up this podcast, just with kind of a question of, we do have the election, let’s go full circle back here, again, we talked about a lot of different things and how government plays a role in our investing. But just in a quick lightning round, what’s one company that you think could be either a winner, or a loser from this upcoming election? Maxx Chatsko, let’s start with you on this one?

Maxx Chatsko  

Well, I’m gonna take a page out of your book with renewable energy and say NextEra energy. So it owns a couple of electric utilities in Florida, but it also owns a power generation business called NextEra Energy Resources. So that company goes around the whole country, and build wind farms, solar farms, anywhere in the country, that will operate them or sell them off to the regional or local utilities. So it’s already doing very well. And most of that’s dictated by economics. But you know, there is kind of this energy for, I would say political or social energy for, you know, hey, let’s make this transition to decarbonize economies more more quickly. So if there’s any, again, additional subsidies, as you said, or even just a willpower, NextEra energy will be a huge beneficiary.

Simon Erickson  

Great. How about you, Dan Kline?

Dan Kline  

So I’m not going to go with specific company. But I’m gonna look at a category. I think the status of companies that are based in China, absolutely hinges on this election. And I’m not saying that if we have a change in regime, there’s not going to be increased regulation. But I think there’s going to be a process what happened with with Bytedance, the parent company of Tic Tok was basically a hijacking. There was no process, there was no due diligence there was there was no due process. And I do think if we have a change in the president, we are still going to try to make foreign companies adhere to SEC rules. But I don’t think we’re just going to pick random ones and decide to ban them overnight by presidential order. I think that you know, that is definitely something we’ll have a normal process for. I’m trying really hard to not be political here while saying something really political. So I’m gonna stop talking.

Simon Erickson  

It’s a tough one when I spot you up with a political question to begin with, right? How about Steve Symington?

Steve Symington  

I’m gonna pick a company I think can win regardless of who’s in power in keeping with my previous assertions. I’m gonna go with Tesla. I think I think they win whoever stays in power but we shouldn’t forget that they’re not just an electric vehicle maker. They have bigger goals when it comes to renewable energy, you know, with their acquisitions in solar and the power wall, the roof that Elon Musk is saying is going to be such a big deal perpetually, eventually, I suppose it will be. But you know, if we have a Biden administration, I think maybe they kind of get supercharged in that area, if we have green energy friendly policies, but they’ve obviously been doing just fine under the current administration. And you know, you we’ve seen what’s happened with their share price and and, you know, the fifth straight quarter of gap profitability, right? I think and there’s, you know, you can you can argue semantics all you want about how they achieved that profitability, but they’re, they’re thriving right now. And I think they do well, in in any scenario.

Simon Erickson  

So yeah, Elan Musk certainly knows how to adapt to any administration and Steve, Tesla was actually going to be my company as well, you and I think about the same thing on so many different topics. But Tesla, like you said, Biden has comitted to 500,000 electric vehicle charging stations across the highways of the United States. He wants to put $400 billion to work into basic R&D. Just imagine what Elon Musk, one of the greatest innovators we have in America could do with with something like that. And so again, you know, Tesla ticker on that $TSLA from from Steve Symington and myself, Maxx Chatsko going NextEra Energy ticker $NEE and Dan going with China ticker CHINA

Dan Kline  

Yeah, I mean, you know, if I need to pick a company, let’s say Alibaba, or like, you know, any of those big companies that aren’t necessarily US based, you know, doing a lot of business here, but they do have products that are here, that you know that we’re going to look really heavily at where our data is going.

Simon Erickson  

Great ideas. Gentlemen, thanks very much for chiming in with your thoughts about what the election might mean for investing. We’re going to share some additional thoughts from Austin Lieberman and Matt Cochrane, a little bit later in the program. And please stay tuned as we as we follow up with them coming up next.

Simon Erickson  

Okay, and we’re back. I’m joined now by my colleague, Austin Lieberman. Austin, we’ve been all over the place this week. But dedication! We’re getting your perspective heard on the podcast here today, we’re talking about politics and government and how that affects our investing style this this month, how would you say the government impacts your style as an investor?

Austin Lieberman

Yeah, thanks, Simon. Happy to be here and happy, we’re able to work this in I wish I could have joined everyone else. But we’re, we’re making it happen. And we’re working, distributedly and virtually so it’s great. Um, this is gonna sound weird, but government, to me is everything, but also government, and politics. In some ways, I completely ignore it. And so in a way, it’s everything. And when I say that, I mean, just broadly, I, you know, more than 75% of my portfolio consists of companies that are headquartered in the United States, right? And so when I say government is everything, when I’m investing in companies, I generally want them to be in countries, in regions that I feel like there’s stable government, a rule of law, democratic process, and not, you know, a dictatorship just because I believe that that sparks innovation. We’ve seen through history that sparks company growth. And just in in our limited history as a country, the United States, compared to the rest of the world, our markets have done pretty good over time. So that’s sort of how I look at it and what I compare it to so  but then when I’ve found countries that I feel are appropriate to invest in which the United States and then it in general, I do like to look internationally. So I also consider companies that are in Latin America, Western Europe, Australia, and even parts of Asia. And there’s certain parts of Latin America that are like, yeah, we, the things get pretty crazy there. But, but still, I’m comfortable that there, at least in parts of the world that are either attempting to be democracies or making progress in that way, and have governments that feel like they’re moving in the right direction. When we talk about our current political scene in the United States, I don’t focus on it too much. I feel like if I did, I wouldn’t want to invest at all, if I let it impact my investments too much, because it’s so polarizing. And depending on what our biases are, what we want to believe we can find, we can find stories to reinforce our beliefs, and then we can find narratives to be really upset or frustrated or, you know, figure out the negative impact of either party being in any administration. But I think what we’ve seen over time, we’ve had Democrats as presidents, we’ve had Republicans as presidents, our market has done pretty well. And there’s times where the market hasn’t done well. And it I don’t think it’s really correlated to what party or who is in office. I think our country through history has proven that we’re more than, you know, one person or one administration and good and bad, we’ve we’ve prospered through it all. If you look at the history of the stock market, and so we’ve seen it this this week, it feels like the markets down I don’t even know what it’s down 7, or 8% or something like that. Is it because of the election? I don’t know. Is it because of Coronavirus? I don’t know. Is it because we had companies report earnings and some of the guidance was? I don’t know why. It would be really easy to say that this is because of the election and because the market has decided that one person is going to win and the other person isn’t. But I don’t think I don’t think that’s the case. I think this is just what happens in the market. The market has had a really good run this year given everything and and now we’re seeing Coronavirus spike again, we’re close to an election which there’s a lot of unknowns. And I think this is completely normal and actually it’s healthy for the market. You can’t have a market that just goes up that that’s how bubbles form so I’m kind of happy that this is happening. It stinks to like lose money, at least in your portfolio. But in this is healthy for markets. So yeah, I throw a roundabout answer Simon I guess, to answer your question. It’s everything but then it’s it’s nothing in terms of whether or not it’s going to make me invest or not invest. I’m just sticking to my my process.

Simon Erickson  

Good old faith in the American economy. To me in business innovation, and you know, Austin, we published in our articles for subscribers last week, you know, we asked, we asked each of us for a company that you would stand by you picked Twilio, maybe just a quick minute or so on what you really like about this company, and what it is that really attracts you to this as an investor.

Austin Lieberman  

Yeah, so, you know, I’ve been a fan of Twilio for years now. And what I like about them is that they’re just building a cloud based communications platform. And by communications, it’s mostly the ability for applications to talk to each other. And so but they’ve also introduced more recently, and this is why I’m really excited about the company right now, they just had their signal conference, which is their annual conference, and they’re introducing a lot of new products that are really trying to help the like retailers provide real time, customer communications and customer updates. So that might look like a retail associate in a store with this new product frontline that Twilio is introducing, that could be communicating with customers through WhatsApp or another even SMS or another chat chat app. And the customers could be asking for updates on a certain size of shoe or even a picture of a certain style that might be in or whatever it might be in the store and the associates are going to be able to they call them deskless workers, people that don’t work at a desk, but work around stores, they’re able to travel around the store, interact with customers provide a really good customer experience. And then they’re integrating real time video, and just the ability to really customize the customer experience. So I’m excited about that. Additionally, they just acquired Segment, which is going to give them a lot of great insight into customer data and analytics and really tie that together. And that’s going to help Twilio as customers. And then they’ve been working on what’s called Twilio Flex, which is a programmable context center. And so when we think about context center, it’s um, you know, the best example I can think of is like cable companies and telecom companies that have a bunch of people, you think of them in big call centers that are doing customer service and answering calls? Well, they have the ability to now work from anywhere and do it from home. And with Flex Folios program or contact center, they can build it exactly the way they want it and customize it and really give their agents the ability to interact with customers and provide good customer service from a contact center perspective. So those are kind of like the desk workers. So there’s a lot going right in Twilio’s direction there. They’re building a really solid, you know, enterprise communication platform to provide a lot of critical functions for businesses. And it’s still looked, I think around a $50 billion market cap company. I could I could see it growing for a really long time.

Simon Erickson  

And I like the customizing the customer experience. I think that should be their new tagline, actually. Yeah, let’s let’s let’s wrap this up with our with our colleague, Matt Cochrane, too, who wasn’t able to be here with us on the call at all this week, but I did want to make sure that his perspective was heard as well. He said that depending on the winner or loser of this election, he believes the financial sector, specifically big banks have more at stake than most other sectors. He has pointed out that the Trump administration has lower taxes and ease regulations and yet still, many banks such as Wells Fargo have struggled. If Biden wins, he expects that they we might see corporate taxes be raised and regulations tightening. But he says regardless of the outcome of the election, we are probably in a very low interest rate environment, no matter who wins. And that could create a difficult environment for big banks to thrive. So he’s keeping an eye on if there is a Trump victory, he says that there might be two big banks such as Bank of America, or JP Morgan Chase, which could be good investment ideas. Austin, neither you nor I as a banking expert, but any thoughts about Matt’s comments about what’s going on to the banking industry?

Austin Lieberman  

Yeah, my first thought is I defer to Matt, because he’s much smarter than you or me in banks. I, I don’t care who wins the election. I’m not investing in banks. They just don’t appeal to me (or) make sense to me. But one interesting thing is a couple years ago now, I guess it was like 2018, which feels like 10 years ago, people were really scared about interest rates going up, right? Like I remember we were thinking about getting a mortgage on a house and we were worried about interest rates like skyrocketing, they’re supposed to go and then they plummeted. So everyone’s thinking interest rates are going to stay low. The only thing I could think is like that probably means they’re actually going to go up sooner than everybody’s thinking I still don’t know if that means banks are a good investment. You know, the fact of the matter is there’s PayPal and Square with Cash App that are just innovating and appealing to millennials and the younger generation. And I just don’t know how the banks are going to catch up to that.

Simon Erickson  

Yeah. And I think Matt nailed it. Right. This is a combination for banking of interest rates, and you know, that’s going to be very low for the extended future. And then regulations, you know, regulations on whether you can pay out your dividends as a bank, what your capital ratios are, all of those things factor into and that all plays a part with government. Hey, Austin, thanks for joining me. I know it was a little bit after hours here, but we really appreciate your perspective on this podcast as well.

Austin Lieberman  

Yeah, of course. Happy to be here. Thanks everybody for listening.

Simon Erickson  

Yep. Just to recap, we had some ideas that we came out with on this on the show NextEra Energy was one that was mentioned by Maxx, that ticker is NEE. Dan had a collection of Chinese companies that we mentioned in various capacities. Steve and I mentioned Tesla ticker on that is TSLA. Austin just mentioned Twilio, TWLO And Matt mentioned JP Morgan. And so that’s a wrap for our team podcast here today. We looked at the intersection of politics and investing and what that could mean for the stock market and your portfolio. If you’re interested in 7investing and our mission is to empower you to invest in your future. We’re picking our seven best stock market ideas every single month and providing them for $17. We encourage you to come check us out at www.7investing.com. So for my entire team. I’m Simon Erickson. Thanks for tuning in, and we’ll see you next time.