October 2025
IN THIS ISSUE
Ryder Cup Resulting
Generative AI does not Generate Alpha
Washington is going to do Washington
Political theater in Washington D.C. creates uncertainty among investors. Whether the uncertainty centers on tariff policy, debt ceiling negotiations, or a government shutdown, these events are inevitable features of U.S. politics. Washington is going to do Washington.
And yet, government shutdowns historically have had a muted, negligible impact on financial markets. In his recent article What Does a Government Shutdown Mean for Stocks?, Dan Burrows from Kiplinger noted:
Federal government shutdowns aren't bad for stocks, at least historically speaking.
Although the market hates the threat of a federal government shutdown, the S&P 500's performance during past shutdowns has been pretty good.
…
It's sort of counterintuitive, but in past government shutdowns, the S&P 500 rose 55% of the time, generating an average return of 0.3%, according to data from Carson Group.
Even better, 12 months after the end of the shutdown, the S&P 500 was higher 86% of the time, with an average return of 12.7%.
Government shutdowns are short-term political crises, not long-term economic shifts, and are rarely viewed as threats to fundamental corporate earnings or the long-term health of the U.S. economy (How will the US government shutdown affect the stock market? | Endowus SG).
I have no idea how long this shutdown will last. While it does, short-term swing traders can have fun with trading the hour-to-hour and day-to-day political developments. But diligent long-term investors should stick to the plan, and remember the difference between trading and investing.
As I have written previously, the only people who get hurt on roller coasters are those who jump off. A more informed approach is to analyze a roller coaster’s ups-and-downs in advance, evaluate objectively whether to get on, and once one chooses to get on then commit to riding out the expected-and-planned-for volatility. The ability to withstand ordinary market volatility - the roller coaster when Washington is going to do Washington - should not change investors’ long term strategies.
ONE MORE THING…
Ryder Cup Resulting. This “cardinal sin” criticism only works if you made it before the Ryder Cup began. If you could not identify Bradley’s specific decisions as flawed at the time the decisions were made, instead relying only on the results to judge the quality of the decisions, then you are Resulting. Keegan Bradley's cardinal sin as U.S. Ryder Cup captain came before Americans arrived at Bethpage Black
Generative AI does not Generate Alpha. Ken Griffin’s observation is an interesting insight on whether hedge funds that seek to outperform by aggregating more information faster and better than other investors is a viable strategy. If Generative AI cannot curate an informational advantage with all of its superior computational power, then how can mere humans? Ken Griffin Says GenAI Fails to Help Hedge Funds Produce Alpha
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