Monday, April 13, 1998

Washington vs. Wall Street
By Chris Rugaber (TMF [email protected])

A few months ago, I joined the Fool after several years on Capitol Hill and other political jobs. The similarities and differences between the political and financial worlds are both interesting and amusing.

One difference is the lack of technological know-how among Washington decision-makers. For example, many Senators are yet to have a computer on their own desks. And many of you may have read of the controversy that surrounded one tech-savvy Senator’s efforts to bring a laptop computer to the Senate floor: believe it or not, the request was denied. To bring a laptop to the Senate floor would be "disruptive." After all, it chirps and beeps! Perish the thought of anything interrupting such great orators in mid-harangue.

However, there are probably more similarities than differences, such as the role of Conventional Wisdom. Just as many investment gooroos will serenely predict the future of the market, and will frequently be wrong, the political pundit class can be equally way off base. Probably my favorite example comes from the 1984 version of a book considered the "political bible," The Almanac of American Politics. While discussing Arkansas government, the Almanac included this note: "After his reelection in 1982, Governor Clinton was mentioned, absurdly, as a future presidential candidate."

A more recent version would be the buzz that surrounded Senator Phil Gramm (R-TX) during his brief 1996 presidential run. Gramm amassed millions of dollars and was considered by the political Wise to be a leading candidate for the Republican nomination -- until he actually got in front of the voters, and his $20 million fund-raising machine was quickly humbled.

Clearly, the skepticism one learns in the political world is useful in the financial arena. The hype that surrounds the latest hot stock can be strikingly similar to that which surrounds a "hot candidate": it is usually generated by "insiders" rather than individual voters or investors; the "insiders" may have an interest in pushing the stock/candidate that isn’t exactly altruistic; and of course, the Wise in both fields pay too much attention to the short-term in what are really longer-term endeavors (think of all the Wise who wrote off President Clinton in the first month of his first term, for example).

Conversely, the Foolish ethos one learns here in Fooldom is useful in politics. The next time you hear one of the many "Washington pundits" attempting to predict the next President, ask yourself: is this person the political equivalent of Wade Cook? Can someone tell me who will be the President in 2000, when it’s only 1998, anymore than they can tell me what the market will be doing then? (Answer: no.) So, yet another reward for reading The Motley Fool: political Foolishness!

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