Looking back over history there are many times when policy, politics and fear overcame markets. It happens in just about every market; real estate, Wall Street, currencies and commodities both domestically and abroad. Sometimes these markets react favorably and other times unfavorably.

What is exceptionally tough to do is to use policy, politics and fear to accurately predict the direction of most markets in the long term.

In the short term, for example, it would be hard to deny that a significant reduction in the corporate tax rate would be great for U.S. business profits - and that may impact the value of certain domestic companies. On the other hand, what you’ve heard about policy discussions are just that, policy discussions and not proposals of law. As talk becomes proposals of law and new laws become effective –  there is nothing more than a pari-mutuel effect going on in markets.

Some are taking bets that proposals will make it to the law stage and others are betting that laws will not change. Right or wrong, markets are likely to be impacted throughout the talk stages with the end result determined over the long term based on any actual changes combined with all of the other economic and world variables that may impact markets. Reality almost always wins out over emotions in the long term.

Part of the problem is defining what long term is. Just how much volatility are you able and willing to endure to maintain your investment discipline through time periods of turbulence?

Is long term tied to a fixed time period, such as ten years or more? Or is long term tied to a presidential tenure, or the duration of a market direction?

I think that one thing we can say about long term is that it is not a fixed period. Consider the decline in interest rates. One could say that the cyclical decline in interest rates was, and may still be, a bullish market for the past 35+ years. That is definitely a long term trend many investors may have prematurely predicted as over.

With the political divide in the U.S. as bad as it’s ever been, many investors today wonder where this will all lead. Those with deep conviction on either side of the aisle sound invincible in their beliefs on the direction of the U.S., its economic state and ultimately investment markets.

The best medicine for concerned investors now may be to ignore the screams coming from the kitchen. Drop back and take a bigger picture look at your investment philosophy.

Understand your allocations and know where the risk lies in your portfolio. Some may be surprised to learn where the risk comes from, as it may all be hidden in a favorite holding because it’s done so well for you.

From there, re-examine your investment needs and adjust to an allocation that mute some of the sounds and fears mulling around your thoughts.