Warning. Investment "narratives" may be harmful to your financial health.
An investment narrative is a market forecast based on a hypothetical chain of events. If X, then Y, and of course Z. Narratives are an important part of the investment process. We need deductive logic to form strategies. But as every experienced investor knows, forcing an opinion on the market can easily go wrong.
Narratives gone wild
In recent client meetings, I've noticed a wide range of opinion regarding potential market outcomes in the new political environment. The dispersion and polarity of beliefs is perhaps the widest in my three decades of money management.
On one hand, President Trump intends to lower tax rates. On the other, he might start a trade war. On one hand, he is pro-business. On the other, his deal-maker meddling goes against free-market principles.
A savvy investor friend is constructing a "Trump" portfolio, favoring businesses…