Market Mind Games

Emotion, Risk and Market Behaviors

Voting Rick or Mitt Needs to Be a Risk-Management Decision

Are Republicans risking more Obama over people's sex lives?

Voting for a US President (particularly when we punch the pinpoint most reflective of our personal convictions) gratifies us. Republicans however need to realize that electing their candidate is actually a risk management question much more than some valuable declaration about other's procreation practices.

Optimal risk management first and foremost protects one's organization against the biggest and most costly disasters. What therefore poses the biggest threat to the Republicans? Does anyone even ask themselves that in the privacy of the voting booth?

Today's New York Times reports on the right wing political pundit's complaints that Romney doesn't really speak their language. Ok, let's suppose that is even true. Is that a bad thing? Maybe, this very trait they complain about is a great risk management asset in the long term. Independents decide elections and Independents don't speak Ann Coulter's or Rush Limbaugh's language either.

According to Real Clear Politics, Santorum is currently winning both the Michigan and Ohio primaries but still doing worse than Romney against Obama. Yet the worst outcome a Republican can get is a 2-term Obama. Is that risk worth it over a) Romney isn't really one of us, or b) anything (and I do mean anything) having to do with how anyone else conducts themselves with their clothes off?

Does it make any risk management sense to vote for religous beliefs versus a higher likelihood of winning the battle? This is cutting one's nose off to spite one's face—bloody terrible long term risk management.

Everyone knows that the economy decides elections and in a mere 90 days, an economy once on the brink and then unable to exit rehab appears to have healed - and simultaneously resuscitated Obama's previously dismal prospects. All signs are pointing to the likelihood that he is going to be hard to beat. Republicans need some strategic thinking. They need to be asking the risk question.

Making choices about an unknown future is now known, neurologically speaking, to depend on emotional context. We like to wrap intellectual facts around our feelings but another term for this is rationalization. Relatively speaking, Santorum comes across as a bit more of a regular guy while Romney has a veneer of the untouchable. That's going to make voters feel better about Santorum—but they need be asking, at what cost?

Risk management isn't a precise science but you have to do your best to prevent the disaster scenario. If an Independent has to choose between the known quantity—Obama and someone who believes contraception is dangerous to women, who will they choose?

Like all risk decisions, it's never truly about what you think and all about what might the other guy do. Correctly predicting that is the best risk management framework of all and unequivocally turns Romney into the less risky choice. Alas, however I fear that the ostensibly moral arguments will skew the judgment of the average voter much like that average voter thinks greed skewed the risk judgments of bankers in the mortgage bubble.



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Denise Shull is the author of Market Mind Games, a game-changer in how we think about anything that seems risky.

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