We're almost there. This federal election campaign, which really started the day Julia Gillard was sworn back in as Prime Minister in 2010, has a little over 24 hours to go.
For many Australians, the election can't come soon enough – with many mentally switching off weeks ago, having either already decided who to vote for, or just being sick of the news, ads and ever-present corflute campaign signage, doing their best to avoid it altogether.
A circuit breaker
For some investors, the election holds out hope of being an investment game-changer. The school of thought – which has some validity – is that consumers and businesses have been caught up in a confidence-sapping slump caused by a minority government and consistent negative political campaigning.
Despite our very solid economic circumstances – borne out by GDP growth, interest rates, unemployment and a host of other metrics – the accepted wisdom is that we're in dire straits. Regardless of your political persuasion, it's hard to argue that a more balanced view of Australia's relatively good economic circumstances wouldn't be good for confidence and economic growth, so the absence of negative campaigning – no matter which party wins tomorrow – will be good news.
Too much credence
More importantly, though, investors who focus on the outcome of the election itself are likely missing the broader point. Despite commentary from both parties to the contrary, politicians have little influence on the success of the vast majority of our listed companies. Of course, there are exceptions – such as McMillan Shakespeare (ASX: MMS), whose success or relative failure rests on the whim of government regulation – but neither party's policies are so different from the other that they are likely to materially impact on profits.
The same number of customers will walk through Woolworths' doors, the same number of Coke cans will be consumed, and – unfortunately – the same amount of money will be lost gambling.
Focus on the long term
In keeping with our Motley moniker, we hold different political views at The Motley Fool — some of us lean left, others right. Mostly, though, we just want an honest, competent and thoughtful government that is prepared to make difficult decisions and think past the next election.
We've been accused of being both pro-Labor and pro-Liberal… which probably means we're somewhere in the middle! At this election, we just hope our fellow citizens vote for the best quality people they can find.
By the way, our plea for long-term thinking is based on what we think will be best for the country overall, but it's also what we think is best for investors. Short-termism in investing is a recipe for underperformance, just as it is in politics. We'd all like to pay less tax today, but if it comes at the expense of higher taxes tomorrow, we're robbing Peter to pay Paul. Ditto infrastructure, social policy and anything else you can think of. We invest for the long term, so it's in our interest to have a parliament that is seeking to maximise Australia's long term future as well.
A plea for the future
It's to our national cost that politicians have been unprepared to really talk about the big issues facing Australia. Our companies can't thrive over the long term without long-term thinking – and decisions – from our elected representatives. Slogans and scaremongering from both major parties do little to give us confidence that they're about to make good decisions in the country's long-term interest. That's not a partisan view – it's a plea to our politicians' better natures.
This next term of government will do little to impact on shareholder returns between now and 2016. International economic growth and movements in interest rates and confidence are far more impactful. But decisions taken by the next parliament do influence the sort of country we become in the years to come.
Investors are right to consider the economic credentials of the major parties, to determine which party will do most to support and improve our country's long-term prospects. But they're wrong to assume that either party's policies will materially impact the profits of ASX-listed businesses during the next three years. (In fact, they'll owe more to the Hawke, Keating and Howard governments' economic reforms, but that's a story for another day.)
Foolish takeaway
That doesn't mean that traders won't push the market around next week. In the game of 'trying to guess what the market will do tomorrow', there may well be enough expectation of share price gains for it to be a self-fulfilling prophecy. But that effect – if there is any – will soon pass, and trying to guess whether it'll happen is a mug's game.
The guessing game is a somewhat interesting sideshow – but as irrelevant to long-term wealth building as the election is for short-term results. If you want to take something from this election, let it be a derivation of the tongue-in-cheek electoral maxim – invest early and invest often!
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Motley Fool Investment Advisor Scott Phillips owns shares in Woolworths. You can follow Scott on Twitter <@TMFGilla> https://twitter.com/TMFGilla.
