Freedman’s Doctrine on Political Risk

Stock analysts should gauge company neutrality.

The U.S. economic system is changing profoundly under the second Trump administration.

We are shifting away from Keynesian free-market capitalism toward centralized, greased-up economy. Republicans make it clear that they will reward companies and law firms that support Trump’s policies, his "presidential library," or his personal money-laundering ventures.

Paramount Global demonstrated in July that bribing the Trump administration will not be discouraged. The media giant settled a bogus defamation lawsuit by paying Trump $16 million, thereby ensuring that Trump’s FCC would approve Paramount’s proposed $8 billion merger with Skydance. The lawsuit would have been laughed out of any court based on First Amendment protection of its “60 Minutes” program on CBS. But despite a “slam-dunk defense” (in the words of Nick Catoggio in The Dispatch), CBS’s parent company Paramount paid the settlement as a massive bribe to Trump.

Companies and executives that capitulate to the authoritarian regime will be favored by regulators. Companies that are perceived by the administration to be a threat to Trump’s ephemeral dominance and flabby ego will be punished. Executives (and their lawyers) who speak truthfully about Trump's lies and corruption will be denounced or "investigated."

Stay Neutral

Companies must choose between two strategies to navigate political risk: (a) stay neutral or (b) buy off the regulators. We recommend the former, because when the regime changes the regulators will change. Even if the regime doesn’t change soon, once you capitulate to a gangster, the gang will never take its hands out of your pocket. Also, when you support corruption, you will be dominated by lazy, stupid, unqualified regulators who devalue expertise.

Water Sector LTP stock analyses weigh political risk heavily in its ratings in the water technology sector. We consider three factors when judging a company’s political neutrality:

• Political donations to candidates made by the corporation and by executives on behalf of the corporation, especially in an election cycle (reliable source: opensecrets.org).

• Corporate policies regarding political contributions and lobbying.

• Alliances with politicians, political parties, extremist organizations, or highly partisan media.

From an investor’s point of view, it’s better to invest in companies that remain neutral politically. Keep the authoritarian regime’s hands out of your pocket.

© 2025 David M. Freedman