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The Protests Are About More Than Police Brutality - Investment Implications

Jun. 01, 2020 2:21 PM ET50 Comments


  • Peaceful protests have morphed into violent riots in the wake of George Floyd's death.
  • These events are as much about economic inequality as they are police brutality.
  • The have-nots are fed up with the continued growth in wealth disparity.
  • These developments may have political consequences that lead to policy changes, which will have significant implications for investors.
  • This idea was discussed in more depth with members of my private investing community, The Portfolio Architect. Get started today »

My job is to navigate the market, manage risk, and try to make money, so anything other than an apolitical approach, one that injects bias into my analysis, is counterproductive. Still, I must consider how policies might change when leadership does, and as the November election approaches, the market will become acutely focused on the polls. The investment implications are enormous.

As peaceful protests morph into violent riots in more than 40 cities nationwide, I think few have yet to see the forest for the trees when it comes to the groundswell of unrest spreading across the country in the aftermath of the death of George Floyd. These demonstrations could end up being about a lot more than police brutality, which in no way minimizes the importance of, or focus on, this man's life. On the contrary, in retrospect, his death may be the catalyst for significant change.

I sense a reawakening of the frustrations over the growing economic inequality in this country, which last took center stage following the financial crisis in 2011 with the Occupy Wall Street movement. While that movement fell off the front pages in the years that followed, wealth disparity did not, and it has continued to grow over the past decade.

As the expansion lost steam in 2019 and the debt-fueled rate of economic growth was slowing, the pandemic struck, bringing on a recession with unprecedented force and speed. Typically, those with less suffer more during recessions, but this one has been especially brutally discriminating. It has had a far more devastating impact on minority groups, the uninsured, and low-income workers. We are in the worst recession since the Great Depression, with unemployment approaching 20%.

Meanwhile, the Federal Reserve has implemented policies to battle this economic contraction that continues to do little more than inflate

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Lawrence Fuller profile picture

Lawrence Fuller has been managing portfolios for individual investors for 30 years, starting his career at Merrill Lynch in 1993 and working in the same capacity with several other Wall Street firms before realizing his long-term goal of complete independence when he founded Fuller Asset Management.

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Comments (50)

If you want change to come from the haves, start with the largest privlidged groups: the government workers at all levels then the teachers unions and then the congress with their pensions,special health care and perks!
*hence the Declaration of War* I would imagine.
I had that pay and benefits at one time and they were truly awesome.

But a *faith based initiative* took all that away AND A WHOLE LOT MORE.

That particular God didn't hide his hatred of everything ever that was and ever will be Americans. Meanwhile somewhere over in the Middle East is a War going on 20 years with nothing but radio silence on THAT.

God walks on Earth amongst us as the living and these protestors of God as their faith have now been destroyed.

So will all the others.
I do respect the honesty of the looters...Armies steal far more. But in the end that's still an Army...indeed THE Army...the most powerful upon the Earth. That will be respected and sadly through fear.

Or worse.
terryongarland profile picture
Income inequality has been growing in Democratic held cities for decades..so Biden is going fix that. In Los Angeles a failed school system routinely graduates the majority of the students with comprehension of English and Math of around 40%. They are functionally illiterate. The results are similar in all large American cities. Inequality.. What a joke, when the root of inequality is not being addressed. They talk about reform but nothing changes except school district bureaucracies which spend money willingly..with no results. Biden ?..jeez.
Comparison with UK: in 1945 Britain was bankrupt. Before the war there was severe poverty. The people responded by electing a government which introduced social security, universal health care, and free education. This was necessary to rebuild, leading to fast improving conditions for all in the 1960s-70s; with a notable lack of societal tension.

Since the 1980s inequality has grown. Real wages are lower than pre GFC, while cheap money pumped up house prices and equities. As in the USA, people resent this. In 2019 it was far from improbable that a communist Corbyn government would be elected - fortunately the people had more sense. A rough comparison would be an extreme Democrat President & congress throwing out money.

Either we plan gradually to reverse the inequality - not least with better education, housing and law & order - or we face a disintegration of society and ruin for small private investors.
Mr. Fuller, thanks for the expanded view of the current civil unrest. I don't have anything to add about the action taken on the streets, I do however think it's important to note that fewer than 60% of eligible voters do so.
"I think the [right-wing] populist movement that took a chance on Donald Trump in 2016 is likely to pivot in the opposite direction in 2020, resulting in a Biden presidency and a public that will hold his him to account."

Possibly will happen, considering that voters are completely unaware that Biden is a right-wing, law-and-order Democrat. He is the author of the "Violent Crime Control and Law Enforcement Act of 1994" which vastly enhanced the power and impunity of the police and converted many former misdemeanors and victim-less crimes into felonies, and funded a vast expansion of the prison-industrial complex, especially privately operated prisons. As Obama's vice-president, Biden was organized law enforcement's best friend in the White House. During the Obama years, police were killing well over 1,000 people every year, and enjoying impunity in almost all instances. He was Delaware's Senator in Congress, where he helped protect and maintain Delaware's status as a major tax haven for the wealthy and corporations. Biden is now falsely presented to the public as a friend of the working class. He is no friend of the workers. Biden is a committed friend of Wall Street and is likely to be good for investors.
jbradsh1 profile picture
Exactly how did you determine that the current riots are about economic inequality? That is so far off the mark it's almost not even worthy of comment. It's about anti social people using a single example to loot and destroy. In this life, we have people who are more able than others and some people are are just not able at all ... none of that matters, it's only whether people are social or anti social that cause all the trouble ... it's that simple.
Does anyone really think these rioters outside Minneapolis were a spontaneous reaction to the death in that city? Please! NYC's DiBlasio has been bending over for the underrepresented since he took office. Has that stopped people from looting the city? Thinking a change of Presidents and policy is going to appease anyone is ludicrous. Giving people an excuse for failure will just insure continued failure. Opportunities are created by hard work and a little common sense. I can give you a number of examples, including myself and a number of associates both white and black, who were born poor and succeeded not because they were rocket scientist but because they worked hard and smart. And by the way they stumbled along the way but got up and dusted off.
Teach kids how to succeed and don't give them an excuse to fail.
jbradsh1 profile picture
Well stated ... it really does start with education which starts with parents setting a good example for their kids.
pandnh4 profile picture
Nice article, but the enhanced unemployment benefits provide an extra $600 per week... NOT monthly!
Lawrence Fuller profile picture
@pandnh4 I know, good catch, thanks.
Thanks Lawrence. Right on. Its time we started investing in all of our human capital, not just the haves.
Maxwells Demon profile picture
@Lawrence Fuller Your analysis is spot on. And one way or another Elizabeth Warren is going to be setting a lot of the economic and financial policies of the coming Democratic administration, either asa the VP, Secretary of the Treasury or Chair of the Senate Banking and FInance committees.
In 1968 street protests against the VIetnam war turned violent and helped sweep the far from popular Richard Nixon into office. This time the Republicans hold sway in DC and are overseeing 1) a bungled response to the Covid-19 pandemic. 2) A bungling response to the economic repercussions of their response to item #1. 3) An inflammatory response to the hijacking of legitimate protests by a small minority. These are things for which they will be held responsible by enough voters to virtually guarantee a tidal shift in direction.
Ronald Reagan ended 50 years of Democratic rule in 1980 and, while Joe Biden is no Ronald Reagan, Warren kind of is and Biden is just the reassuring frontman to enable the country to move in her direction.
terryongarland profile picture
@Maxwells Demon.. Bungled response to to Covid 19 ? I see this constantly in the msm. So what was bungled and how would you fix it ? Crickets.. Inflamatory response to hijacking protest by small minority ? That "small minority" destroyed the lives of hundreds of small business across the country, crushing those after 2 months of shutdown..as big an injustice as George Floyd..remember him.
I believe it's fair to say that mistakes were made on Covid 19 across all levels of government.Everyone was caught flat footed ,and Biden or Warren would have made mistakes too. I do believe you're correct in a tidal shift..but the direction of that shift is not apparent. Yet regardless, we are approaching a level of discourse that will not end well..it is disheartening.
Further, both parties are complicit in furthering their interests at the expense of citizens of the USA.
Call me old fashioned..I believe in the US Constitution and the Bill of Rights.
Maxwells Demon profile picture
@terryongarland So nice of you to use the passive, no blame "mistakes were made trope" for an administration that spent 10 weeks (that's 10 weeks, 70 days) denying and obfuscating at the cost of tens of thousands more lives lost. But even now there is no response that is aimed at helping keep people in their homes and out of starvation. No plan except to open up as quickly as possible as if that will solve everything and not accelerate the spread of the disease that has been slowed by measures taken.
As for the destruction, no excuse for that behavior, but don't let it distract you from the actual cause of the protest which is police violence against people of color. ANd if you respond by saying it's only a few bad actors (I kind of agree, but the few is a larger number than you may believe, much larger) the same holds true for the rioters who are a very small fraction of the protestors and is a group made of extremists from both the left and right along with the usual criminal element.
As for the Constitution and the Bill of RIghts (and all additional Amendments to the Constitution) I believe in them also, unfortunately the current administration has demonstrated time and again that it does not.
The author needs to stop being a soft hearted liberal. If the have nots had paid attention & studied harder in school & then worked hard afterwards, they would be the haves. Not sure why I should be penalized for doing the right thing. I hated HRC for wanting to eliminate the tax advanatage on long term holdings back in 2016.
Lawrence Fuller profile picture
@OE1980 Sorry your so unhappy, I hope things turn around for you.
as a former inner-city school teacher, my experience says its much more complicated than simply working hard - that being said, i saw hundreds of hard-working students, mostly from immigrant families, doing exactly that - working hard to have better life than their parents. And i saw hundreds of students not doing it. usually it came down to family life and natural giftedness.
Nah, Biden becoming president will be a bullish catalyst for the markets just like Covid-19, China taking over Hong Kong and riots.
shortsqueez profile picture
The economy was booming when Clinton handed off to the Bush republicans. After 8 years, the economy was is ruins. The economy was booming when Obama handed off to the Trump republicans. After only 4 years this time the economy is in ruins. Destroying the economy once is bad luck; destroying it twice appears to be carelessness.
Rigorous profile picture
Raising taxes on the rich and on corporations and giving it to the bottom 50% will not make a difference. They will still be in the crapper. Jobs and education are what is needed. Those two things go a long way to change poor cultural habits. Education doesn't need another dime. It needs reform. Manufacturing jobs,somehow, must be increased significantly

Government created phony jobs don't count. Private sector jobs are needed.
Maybe work providing a wage that allows for discretionary monies to speend while enjoying time with the family, friends. You know, like back in the 50 ties and 60 ties. Oh, maybe a parent with the kids at all times.
Agree with the jobs and eduction needed but education needs $. $ that go to citizens that want to better their lives and can't now afford it. We have wasted enormous potential in this country for way to many decades. Helping students pay for an education is called investing in our future.
Amouna profile picture
I agree. The focus on quality education and access to equal opportunities means abandoning the quick fix mentality that is so endemic in this society. People will have to learn the value of delayed gratification, putting in the effort to see results way down the time line. Neither of these is a positive for the quick fix, easy gratification consumption based economy that is the US, so it will most likely hurt growth in a secular way, especially if growth decelerates in other parts of the world.
Very valid points, though I don't believe a Biden victory in November is a sure thing. There's plenty of time and (probably) many a crisis between now and then.
JohnB Investor profile picture
Income inequality? How about this as a problem: we aren't allowing the opportunity for the poor to contribute to society, while we give all kinds of opportunity for the wealthy. And this is a problem for all of us because we need their contributions. Meanwhile, violent racism is pervasive and makes things much worse.
Only you and I know these. The poor and hand labor are so dumb to know the federal resevend congress ahave been long sell them out. If they smart the protest should be I. Front of Central Bank not white house or congress
rollen18 profile picture
Please could you repeat that.
A great article.
capitalallocator profile picture
We want equality of opportunity. The looters want equality of results. "My boss drives a BMW so I should drive one too". Worse still "Your grandfather enslaved my grandfather, so YOU should give me $ 14 Trillion in reparations". JESUS CHRIST.....
sts66 profile picture
The looters are sick of being killed by cops just because of their skin color - it's not a white cop/black person problem either, in Baltimore black cops kill black suspects. Ask yourself when was the last time you heard about a cop killing a white guy?
Happens all the time. Just doesn't make good visuals on the television.
The purpose of having these riots be told in this way is to continue the riots.

Doesn't seem to bother the Mayor of Minneapolis one bit either...but make no mistake he's the one with the Vendetta not those who are protesting. The fools are the ones "aligning themselves" to his so called "ideals."

Ideals that are shared by quite the vocal minority indeed...and I ain't talkin the African American community either!

Still...these riots didn't start here and it is in the Federal Government's interest to see events unfold the way they have. I mean seriously... Minnesota? Taking down Target in their own backyard? I don't think these clowns went to the right Academy for the Art of Insurrection!

Plus now if you're anything Not Trump you're an actual terrorist!

That sounds like a major demotion to me.
People should be really ticked off tho I agree with that.
I was expecting the Dow Jones to be a thousand points on this situation so count me slightly unimpressed by the real evil-doers in all this.
Rigorous profile picture
Nonsense. Cops kill whites more than blacks in absolute numbers.
*stuffing my BMW full of loot* is an odd way of expressing inequity...but, hey it's California!

It's not like they don't blame Pacific Oil and Gas for all their problems too!
Hilariously this is happening just as all the free money is flooding into their checking accounts.
Of course mere moar trillions is next answer!
Long $slv silver etf
Strong buy
Democratic presidencies have outperformed Republican presidencies by more than 2:1 in market returns over the last 50 years. The reason is simple, they spread the wealth around more and that helps the overall economy. The amount of money that has went to large corporations v. individuals during this crisis is ridiculous. Then to hear Mitch McConnell moan about giving individuals more is simply tone death insensitivity. To be a bit crass about it, the more money you give to the poor, the more they will spend. It gives them the opportunity to get ahead in life. If they do, good for them. For the rest of us, well, we helped them some, but, to the extent they blew it, it helps us more. Folks, have compassion for your fellow human beings. Its the right thing to do and you can get richer doing it. I am not trying to be insensitive saying that. I am only pointing out that you can do the right thing by people, profit off of it and it is/was still the right thing to do.
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