I’m not even finished reading it yet, but I’ve found a new favorite investment book…
It’s Alexander Hamilton, published in 2004 by author Ron Chernow.
Now, I know what you’re probably thinking… “But Marc, that’s a biography.”
Yes, it’s true… Chernow is a Pulitzer Prize-winning biographer. And this particular book served as the inspiration for the popular Broadway musical about Hamilton, too.
So far, I’m only on Chapter 15 of this 818-page tome… But I’ll detail today how I’ve already read enough to know it sends the perfect message to help us put things in perspective.
Let me explain…
In short, this biography about Hamilton – the first U.S. Secretary of the Treasury – has already eased my worries about whether political friction will push the markets over a cliff.
Don’t get me wrong here… I’m not saying what happens in and around a nation’s halls of power is always irrelevant.
Bad things happen when investors and business executives don’t know the ground rules. They don’t always need to like the rules. But they should at least know the rules.
And despite all the turbulence in the world today… the ground rules are clearer now than at any point in history. Despite the perceived turmoil, governments and markets are incredibly stable and structured.
That bit of wisdom has served me well as I’ve worked to make sense of Wall Street…
You see, the crises that hit Wall Steet are those that hurt profits and the capital markets. I’m talking about things like big interest rate changes and liquidity crunches… They’re the types of things that make experienced analysts sound alarm bells.
On the other hand, a lot of “potentially market-moving news” is just noise…
By that, I mean things like the usual infighting, partisan name calling, and investigations in Washington, D.C. Even unfair, cumbersome Big Government rules typically fade. And politics-driven shutdowns usually do more damage to political brands than investors’ portfolios.
Now, you might say, “But Marc, it’s different this time… Today’s political frictions are more severe than ever. And it’s made worse by today’s rapid flow of information.”
This is where Chernow’s biography on Hamilton comes in…
The book expertly details the tumultuous times the U.S. faced at its birth. You might think that the country is more divided than ever… but you didn’t live here in the late 1700s.
Sure, in the early days of the U.S., the spread of information was slower than today… Most of our history has been spared the pounding drumbeat of social media.
But at the same time, a lot can be said when the writer isn’t limited to 280 characters like the social media pundits are today. Audiences had the time and desire to read and discuss, too.
There was a lot to talk about as well… The Founding Fathers of the U.S. dealt with one crisis after another. Taxes were contentious. But rather than arguing about rates like folks do today, they fought over whether any central government should tax at all.
Who should levy tariffs? Each state wanted its own revenue.
States tied together by the loosely drafted Articles of Confederation competed to see which could contribute least to the shared financial burdens. Each state tried to contribute as little as possible toward repaying the debt incurred to finance the American Revolution.
Heck, it wasn’t even clear that we should have a federal government…
Hamilton and James Madison aroused fury for even advocating a U.S. Constitution. They had one job… They were supposed to revise (or “debug”) the Articles of Confederation.
Nobody told them to create a federal government to sit above the states. Would that devolve into a new monarchy – the same thing they fought so hard to escape from?
In the 230-plus years since then, we’ve weathered wars, scandals, and tragedies. I’ll spare you the continued U.S. history lesson… We both know everything the country has endured.
And the reality is that the world as a whole has survived centuries of crises and instability going even further back in history. In the end, the sun always rises the next day.
So yes, we have problems today. But we’ll get through them.
We’ve been through worse before. So it’s important to keep things in perspective.
Good investing,
Marc Gerstein
