Critical Questions Individual Investors Should Ask Presidential Candidates

So far, the 2016 U.S. Presidential Election bears an eerie resemblance to a 2007 George Saunders essay about a guy who walks into a party carrying a megaphone. He’s not the smartest or most experienced or most articulate guest at the party, but he captures people’s attention because “he has that megaphone.” 

“Megaphone Guy” ends ups crowding other voices out. “His principal characteristic is his dominance. His rhetoric becomes the central rhetoric because of its unavoidability,” Saunders writes. 

Sound familiar? Once again, reality Trumps fiction.  

Because of the megaphone effect, which is very much at play in this particular election, it’s been hard for anyone to get a clear picture of where the candidates on either side of the political spectrum stand on serious policy issues. 

That’s a shame. Because if ever American investors needed clarity, it’s right now. 

We are in the middle of the most severe market correction since the post-financial bull market began – down more than 5% this year and 8% from the market’s high, with sectors like energy down as much as 38% or more since its June 2014 high. The Federal Reserve, having raised rates in December for the first time since 2008, now seems spooked enough by China’s meltdown and by a generationally disruptive drop in the price of oil to have put their retreat from easy money on hold. One of the leading market seers, Mohamed El-Erian, is declaring the end of “The New Normal” in favor of a fork-in-the road outlook that predicts, in essence, things are either going to get better or they are going to get worse. 

Against this backdrop of uncertainty, individual investors are crying out for some clarity on what each candidate would do to put economic recovery back on the rails. Sadly, the candidates are too busy shouting through their megaphones to hear that cry. 

If investors could get all of the presidential candidates alone in a room, and take away their megaphones, here’s what I think they should ask: 

• Since the financial crisis, the U.S. economy has fared better than that of most developed countries, but we are still mired in one of the most anemic, slow, sloppy growth patterns of any economic recovery. What changes in fiscal and economic policies would you recommend that would boost growth, not just in the short run, but over the long term? 
• Biotechnology and pharmaceutical companies are making significant strides in developing treatments to combat life-threatening diseases, and many analysts predict that the pace and transformative effect of biomedical advances might rival what we saw in the computing sector over the past five decades. But these innovations often come at very high prices. How do we preserve health care innovation without pricing patients out of accessing these treatments? 
• Studies indicate that entitlement programs like Social Security (including disability), Medicare, and Medicaid will be difficult if not impossible to afford in the future. What is your plan to reform these programs? 
• How would you create incentives for Americans to save enough for their retirement? 
• Immigration is an important issue from a security standpoint, but it also has important economic ramifications. What would your immigration policy look like? 
• What are your thoughts or plans to ‘reform’ U.S. tax policy to make U.S.-based companies more competitive with peers in other countries and provide an environment where companies want to expand and invest in America, as opposed to overseas? 
• Energy, whether through declining oil prices or global warming, will likely play into investor decisions in 2016 and beyond. What is your energy policy? 
• As President, would you treat America’s obligations to public debt holders as sacrosanct and would you approve whatever increases might be necessary to continue to service our country’s debts? 
• What role do you believe our financial system should play in the 21st century economy? 

This final question is perhaps the most critical of them all, because the two leading candidates have been using their megaphones to bash Wall Street financiers. Democratic frontrunner Bernie Sanders declared at a February Presidential debate, “The business model of Wall Street is fraud…” While Republican Donald Trump, campaigning in Iowa, told crowds, “I'm not going to let Wall Street get away with murder. We're going to tax Wall Street.” 

This overheated rhetoric is, if anything, getting louder the further we get from the financial crisis. At the same time, the regulatory pendulum continues to swing toward the excessive and hurtful end of its arc. 

None of this is helpful to economic recovery or to calming recent market volatility. The financial system is a critical enabler of economic growth. Indeed, it is impossible to imagine our capitalist system without a finance sector. Before we vote, we need to know where Presidential candidates stand when it comes to supporting, regulating or vilifying finance.

RBC Wealth Management, a division of RBC Capital Markets, LLC, Member NYSE/FINRA/SIPC.