Daily Commentary

MarketMinder’s View: As always, MarketMinder is nonpartisan and doesn’t prefer one politician or political party over another. We assess politics’ economic and market implications only. In that vein, this article highlights two useful lessons for investors. The first: Policy, whatever the intent, always carries unintended consequences and creates winners and losers. Politicians, attuned to their constituents, promise to make life better through their legislative proposals—for example, Republicans have floated capping credit card interest rates while Democrats proposed freezing rents and cutting seniors’ property taxes. Those “solutions” may sound lovely (or horrid) depending on your needs and views. But implementing those ideas carries unadvertised costs. For example, “The proposals to freeze seniors’ property taxes? Those could end up raising other people’s tax bills to compensate. Capping credit card interest rates? Some economists predict that rather than saving customers money, that would lead companies to reject credit card applications from low-income customers.” So whenever you consider a policy’s potential economic impact, think past the campaign slogan and consider the downstream effects (which may affect companies’ profitability in unintended ways). The second lesson: Bad policy is bipartisan. Both sides of the aisle are more than capable of pushing ideas that have negative economic consequences—there is no party that produces only “good” legislation. Not that we think any of the policies discussed here are bearish, mind you—they strike us as normal midterm politicking and unlikely to take effect as advertised in this gridlocked climate. We highlight this for the general lesson, not because we think any of this is likely to hurt stocks beyond general pre-midterm uncertainty as campaigns get noisy.

MarketMinder’s View: When markets get bouncy, many investors feel tempted to act—doing something in the face of volatility is one way to feel in control of a tumultuous situation. However, as this article correctly counsels, doing nothing is often the optimal strategy, frustrating as it might seem in the moment. Now, to be clear, we aren’t advocating for a “set it and forget it” approach to investing. If you see a little-noticed negative brewing—one capable of destroying trillions of dollars in global GDP—it can make sense to reduce your equity exposure if you believe there is much deeper, longer downside ahead. That said, participating in bear markets needn’t derail your ability to reach your long-term investment goals—but missing bull market returns can. To instill discipline, consider the scenario presented here: “… Timing the market requires not one but two decisions. We have to get out of the market, and then we have to get back in again. The first of these is relatively easy; the second is difficult. It requires us to swim against the tide, to go against the prevailing mood. What is worse, the longer you leave the decision to get back in, the harder it becomes. If you think losing money hurts, try sitting on the sidelines watching others make it.” It may not sound flashy, but to quote the great Lucien Hooper, “Sometimes you make more money sitting on your hands than you do dancing on your feet.” For more, see yesterday’s commentary, “Six Years On, Lessons From the COVID-Lockdown Low Endure.”

MarketMinder’s View: We found this discussion of the private credit market mixed overall. On the positive side, it gives a decent primer about recent happenings in the space, noting private credit firms “essentially act as banks, but without all the regulations that force actual banks to mitigate risk and make their balance sheets public.” (Also, MarketMinder doesn’t make individual security recommendations and firms referenced here are coincident to the broader theme we wish to discuss.) It also, perhaps inadvertently, illustrates just how opaque the private credit space is—as one columnist cited in the conclusion notes, there isn’t a consensus definition of private credit, let alone any reliable reporting. Where we think this piece misses is the assertion that recent private credit weakness could bring a redux of 2007 – 2009’s global financial crisis. “If private credit sours, big banks that lent to the industry would lose money. In turn, those banks could be forced to tighten lending across the board, including to everyday consumers and small businesses. And that’s where the 2008 Part Two fears kick into high gear.” With private credit’s opaque valuations and illiquidity, the article suggests broader weakness could go unnoticed until it is too late, hitting exposed banks and other financial institutions. Perhaps. But the 2007 – 2009 comparison overlooks several key factors. For one, as the article notes, big banks have around $300 billion in loans to private credit providers (per ratings agency Moody’s, as of October 2025). That number sounds big on paper—and a sudden private credit collapse would cause pain—but those loans represent a fraction of the multi-trillions of dollars in assets on big banks’ balance sheets. Secondly, 2008’s cause wasn’t tied to “toxic assets” but was instead more about mark-to-market accounting rule FAS 157 forcing banks to mark their assets to the latest price for comparable securities, spurring a disastrous spiral when some hedge funds offloaded securities at rock-bottom prices to meet margin calls. There is no such analogue to today, and private credit’s troubles are getting far more attention than the mark-to-market accounting rule’s application to illiquid, hard-to-value assets in 2007 did. For more, see our recent commentary, “Putting the Latest Private Credit Implosion in Perspective.”