Who else is ready to stop hearing about the fiscal cliff?
The most obnoxious and self-imposed crisis of 2012 is just about over, as US politicians agreed on a last-minute deal to avoid the fiscal cliff.
From an investing perspective, as long ago as November, Motley Fool Investment Analyst Scott Phillips told BusinessDay readers:
"The end result of the current impasse is easy to predict -- it will be solved before it becomes a real problem. How and exactly when is uncertain, but from an investing perspective, it's also largely irrelevant."
You could argue Scott was wrong – with global stock markets now soaring, from an investing perspective, the increased volatility and cheaper prices on offer was an opportunity to buy shares.
That misses the point, of course, it being that most commentators were falling over themselves to predict Armageddon for the stock market, the American economy and the free world.
The sky? No, not falling
There's never a shortage of Chicken Littles in investing.
The Motley Fool is different. We know the sky isn't falling -- far from it.
Of course there are grey clouds from time to time, but the productive capacity of capitalism is a powerful force. And if those grey clouds prompt a sell-off in shares, we'll happily take advantage of others' pessimism.
Successful investing is simple -- but not easy. The difficult part is in finding great companies at attractive prices and keeping your emotions under control.
The first requires elbow grease; the latter is something that takes practice. Did you notice that previous paragraph doesn't include commentary on geopolitics or macroeconomic trends? No charts, no algorithms and no Chicken Littles?
Doesn't that make a little more sense? We think so.
The next crisis, coming soon…
Now before you rush out and buy yourself some shares in the latest hot graphite explorer or tiny gold speculator, it would be remiss of me not to warn you of the next impending crisis.
The most disappointing part of the fiscal cliff deal is that it doesn't do anything to address the self-imposed U.S. federal debt ceiling, which was hit earlier this week.
The Treasury is taking emergency actions like forgoing payments to federal retirement funds in order to keep the government's bills paid, but it can only do so for about two months.
After that the U.S. will either voluntarily default on its debt or (almost definitely) raise the limit, as has been done on average every nine months since 1945.
The fiscal cliff debates were a perfect time to agree to raise the debt limit as part of a broader budget deal. With that option gone, Congress and the president now have to undertake another round of playing chicken with the nation's finances in the coming weeks, which means more opportunity to show global financial markets how utterly reckless that country’s elected leaders can be.
The fiscal cliff deal is less ambitious than either party envisioned even a week ago. Bringing negotiations down to the last day possible guaranteed that result.
And as we wrote last week, the US probably won't see any serious long-term budget reform until markets protest and interest rates rise. There is little incentive to reduce the debt when borrowing costs are below the rate of inflation. Until that changes, expect more tiny, short-term budget deals like this one.
As mentioned above, most of this is a sideshow that shouldn't affect how you invest.
The US - and therefore the global - economy is in increasingly better shape, plenty of ASX-listed companies for good valuations, and those who think in decades, rather than weeks or months, have as much to look forward to as they ever have.
If you find yourself tempted to tweak your portfolio based on fiscal-cliff headlines, stop. Dysfunctional politics is no excuse for dysfunctional investing.
Attention: Functional, Foolish, dividend loving investors and BusinessDay readers alike can click here to request a Motley Fool free report entitled Secure Your Future with 3 Rock-Solid Dividend Stocks.
Bruce Jackson is the Motley Fool’s General Manager. You can follow The Motley Fool on Twitter @TheMotleyFoolAu. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).