When It Comes to Politics, Successful Investors Should Be Agnostic

Barney Frank, (D Mass), the Chair of the House Financial Services Committee, is a polarizing figure.

He is the bête noire of the conservative punditry. Whenever he does or says anything, there will be a chorus of objections from those who disagree with his politics or his lifestyle.

Over at Zero Hedge, one of the several "Tyler Durdens" managed to work in a couple of offensive remarks in a very brief post. (We're not repeating them. It will be interesting to see if the Seeking Alpha editorial team publishes this one!)

The issue? CNBC scored one of their "First on CNBC Interviews" by getting Rep. Frank on Squawk Box right before the hearing on executive pay. It all started OK, but then Mark Haines started to weave from straight questions into a discussion of his own opinion. He often does this, and his viewers like it. With a rookie on the show, it can be devastating. Barney Frank showed very little tolerance for this. In fact, he seemed pretty testy about the questioning. For CNBC, it just meant that they lost the interview.

You can see it yourself right here:

Why Listen to Barney Frank?

Barney Frank is one of the most polarizing figures in Congress, at least to a national audience. His constituents think he is great, and he has a very safe seat. (This means that those who believe that he took various actions for small campaign contributions do not understand the political process).

As a funny-sounding, very liberal, and openly gay member of Congress, Frank is an easy target. He is no stranger to controversy, providing more ammunition to right wingers and gay bashers.

Our question is the same, practical, relentless one we have been offering for some months:

Do you want to make a political statement, or would you rather make money?

The blog writers who want some boo-yah's from their audience bash away on Barney. While avoiding explicit criticism of Frank, Mark Haines probably scored points with his own audience by offering his personal viewpoint on executive compensation and shareholder influence.

The Attitude of the Smart Investor

Let us suppose for a moment that you do not agree with Rep. Frank's politics. Here are a few facts:

• He is one of the most powerful people in Congress, at the epicenter of various decisions on financial regulation;
• He is (perhaps) the smartest person in Congress, according to a poll of Congressional staffers. (If you do not see this, then maybe you need to review your personal biases. He regularly runs rings around interviewers, as he was doing with CNBC this morning.)
• He has been accepted by the Street and the GOP (Hat Tip Charles Kirk).

Here is what Crains New York has to say:

Just about everyone in banking wants to be Barney Frank's friend nowadays......

Mr. Frank ambles around the halls of Congress in the type of pin-striped suit familiar to any banker—although his untucked shirt betrays any notion that he might be one. Yet financial executives credit him with reining in his fellow Democrats' angriest impulses about how to handle Wall Street. He can charm Republicans, too: Last month, he was the only congressman ranked among the “most partisan” and the “most bipartisan” in a survey of members by The Hill newspaper.

“He finds a way to negotiate,” says Scott Talbot, senior vice president of government affairs at the Financial Services Roundtable.

Of course, it also behooves bankers to play nice with Mr. Frank. Asked if bankers have come to grips with new realities, he tartly answers: “I think they understand a new set of regulations is coming. And it's better to sit down and get it right than get it wrong.”

You really need to read the entire article to understand how serious financial executives view Frank.

The Simple Question

So it is a pretty simple question. When you are watching CNBC do you want to hear the viewpoint of one of the most powerful Congressional leaders, or do you want to hear opinions from Mark Haines?

Do you want to read some politically oriented bashing of Barney, or would you like to make money?

Investors should be agnostic with respect to politics and to life style. Those who insist on injecting politics as part of their analysis are facing (at least) four tough years of investing.

There are investment stories that will work. It does not matter if you agree with Frank, or Pelosi, or Obama. As long as we can predict what they will do, we can find an edge. Even though we absolutely hate government control of business, we have found winning investments this year.

How?

Be practical, not political.

Comments

[Jasper M:]

I am reminded of the headline of another recent article, here on SA, "Would you rather be right or make money?"
As in that case, I suspect the distinction can be a bit artificial.

For example, if you see a way to profit, from a government policy that you believe will ultimately destroy the nation you reside in, is it better to "be agnostic", make your money quietly, and let the chips fall where they may? I'm kinda' thinking . . . no.

Unless you are just making money to keep score before you die, you (or your heirs) need a healthy society to deploy it in. I am Not the sort to drape myself in the flag, At All, but I recognize that some things I care about cannot be bought with money.

Jun 12 03:21 AM

[Steve in Gr...:]

Barney Frank is treated carefully because he is feared, not because he is respected (think "poisonous snake"). He is feared because he is hard-left politically and because he has power. The fact that people like Barney Frank are treated carefully is a clear sign that the U.S. government has too much power.

My economics informs my politics as well as my investing. I'm staying away from U.S. equities as a result.

Jun 12 09:14 AM

[ain't no fo...:]

When I watch CNBC, which is less and less every day (thank GOD for mute buttons), I want the interviewer to ask a question and then have the civility to shut the hell up long enough for the person they are interviewing to provide an answer to their question. Yesterday Haines ran true to CNBC script by interrupting and trying to talk over Frank before Frank could get a word in edgewise.

Frank is great because he always puts the shouter in his place with a "You asked me a question... are you going to let me answer it?" which seems to shut the other guy up.

If I were Frank, I'd stop appearing on CNBC - they need him more than he needs them. If he just shows up on Bloomberg that would be just fine.

Not only CNBC, but most political talk shows have developed this egregious practice of having shout-fests in which the interviewer and guest, or two guests, or more, get into a shouting match with each other, interrupting each other before they get halfway through their statement.

CNBC and their ridiculous "boxes" where they put 5, 6, 7, even 8 "commentators" up on the screen at once creates an environment where all of the "commentators" start talking and shouting at once - they have no clue how irritating it is for the viewer to try to track a conversation thread when there are 6 people shouting on screen at the same time... so I don't - it just goes on mute.

The Liesman-Santelli nonsense is another example - they should take both of those guys off the air until they learn some courtesy and learn to show the other person the common decency of allowing him/her to speak. People like Kernan and Gasparino, or guests like Jack Bouroujian (sp) are on permanent mute with me anyway, so I don't know what nonsense they're yapping about these days anyway.

CNBC has been doing this increasingly for several years now, and its Jerry Springer "conflict" television at its worst. I wouldn't be surprised if some 2nd rate producer who just came over from FAUX news figured it would be great for ratings. Its also something I have seen a lot of practiced by one particular political party when they appear in "left vs right" interviews - shouting down the opposition just like their former propaganda minister (initials K.R.) seems to have learned and adapted to modern day politics from the experience of the Brown Shirts nearly a century ago (you didn't think I'd let that one get away did you Jeff?).

In my opinion this "conflict journalism" is tasteless, moronic and bad for ratings, at least my ratings, because as soon as that crap starts its off to mute land I go, and usually I just don't bother taking the mute off.... its CNBC and their advertisers' loss, not mine.

Jun 12 09:21 AM

[Joyful Alte...:]

Mark Haines by himself is a good reason to avoid CNBC. He persists in proving he knows nothing, especially how to interview.

Jun 12 09:27 AM

[Alan Young:]

I agree with Jasper: I'm not going to stop having political opinions, and caring how this country shapes itself for the future.

But that's different from pushing a political agenda into investment decisions. There's a certain broker/money manager who has become better known (on SA as well as CNBC) for his political pronouncements than for his stock-picking skills. That should make those who invest with his firm very wary.

Jun 12 10:05 AM

[kohalakid:]

Put me in the "I'll have political opinions" camp. Barney Frank wants to be involved in heavily influencing our economy. To hear him talk about executives taking "excessive risk" and how wrong it is is the ultimate in hypocracy. Wasn't it Frank who said, in House hearings, that he was happy to "continue rolling the dice" with Fannie and Freddie not too long before they blew up?? Wasn't it Barney Frank who called the CEO of GM, post bankruptcy, and told him it would be best if GM didn't close a 90 employee distribution center in Norton, Mass?? It's in a district Frank represents.
My politics say government shouldn't be making such moves into the private economy because govt has a bad record when it comes to running or understanding businesses.
Government should get out of the way, enforce the rule of law, and let business people do their thing.

Of course I want to see the economic and investment system I invest in be the best it can be.

I can't be agnostic.

Jun 12 02:03 PM

[BerkeleyBob:]

It doesn't do an individual shareholder much good to vote to disapprove an executive compensation vote if institutional investors are passive or simply rubber stamp management proposals. Cong. Frank had by far the best of the debate and Mark Haines is something of a buffoon. He is smart, and less ethically challenged than his counterpart in the Senate--when is the favorable terms of the "friends of Angelo" mortgage be treated as reportable income to the IRS?

Jun 12 02:05 PM

[CLH:]

Somewhere we must all make a choice about money. Was it all right to make money with Hitler or Stalin? You decide.

Jun 12 02:19 PM

[Valley Boy:]

We can start being politically agnostic at such time when the politicians stop manipulating the markets.

Jun 12 02:36 PM

[Jeff Miller:]

There are several good comments here, suggesting to me that I need more clarity on this theme.

I certainly agree that we should all act as citizens to get the type of government we want. I also like to see free market incentives in action. I have written about the difficulty of combining public and private purposes in institutions like Fannie and Freddie.

What I encourage is to separate the role as citizen from the role of investor. As investors, we should try to succeed no matter who is in office. Furthermore, I always want to see what is coming from Congress. In this case, I wanted to know what Barney Frank had in mind for executive compensation. Why? Because his opinions are a good guide to what will happen.

I cannot control that outcome, but I can draw conclusions about whether it affects my investments.

Thanks again for some very helpful comments.

Jun 13 01:37 PM

[Swashbuckler:]

"Do you want to read some politically oriented bashing of Barney, or would you like to make money?" I am not convinced the two are mutually exclusive. It is a good, informative article though, as I had no idea that Barney Frank was that much of an intellectual heavyweight.

Jun 13 04:03 PM

[Swashbuckler:]

I may be a weirdo, but I enjoy nearly all of the Tyler Durden AND the Jeff Miller posts There are at least two sides to every story and three sides to some. Especially in economics and politics. In fact, I enjoy reading articles that are diametrically opposed to each other when they are written by some of my favorite SA authors. As opposed to , say, reading a yawner revealing nothing new, posted by a lightweight.

Jun 13 04:30 PM