The political turmoil of 2025 had a profound impact on the economy and how investors think about their financial futures and investment choices.
Americans’ views on the economy never recovered from pre-COVID levels; only 23 percent of Americans now view the economy favorably, a significant drop from public sentiment in early 2020 when 60 percent held an optimistic outlook, according to Pew Research Center. Pew also found that about half of Americans anticipate worsened economic conditions a year from now.
Accordingly, many investors are reconsidering allocation choices. Is now the time to set aside more cash? Move into alternative assets with reduced correlation to the public market? Questions abound, but not all investment shifts being made have a purely dollars-and-cents basis. With a heightened awareness of mega companies’ involvement in political developments, investors motivated by a distaste for company leadership’s actions and affiliations are dumping their positions.
Tesla stock’s (TSLA) journey over the last year reflects this trend. Upon Donald Trump’s presidential victory in 2024, TSLA soared to its highest recorded value. Almost immediately after Trump’s inauguration in January, the stock began a precipitous decline that only turned around in late April 2025. Tesla CEO Elon Musk’s behavior drove this sell-off; his Department of Government Efficiency (DOGE) initiative, which resulted in seemingly haphazard cuts and layoffs at several government agencies, caused anger and distress among investors with opposing political views—even those who own Tesla vehicles and support Tesla’s leadership in the electric vehicle space.
Target stock (TGT) experienced a similar trajectory this year. Since Target announced the rollback of its diversity, equity, and inclusion (DEI) programs and commitments in January, its stock has declined more than 30 percent, a dip driven by investors angered over the company’s apparent drift from its stated values. One victim of the company’s rollbacks was their supplier diversity initiative, which aimed to increase procurement from businesses owned by minorities, women, and veterans.
Investment decisions as a form of political speech are not a new phenomenon, but the rapidity of reactions to companies’ shifts in policy and C-suite executives’ views is remarkable; investors should carefully think through investment decisions, especially those stemming from emotion. So, what factors should you consider as you weigh the decision to hold or divest from a position you no longer find acceptable? And what are some options for moving forward?
Know Your Position
Is it an individual stock? Is it a stock held within a mutual fund? Is it a bond? Owners of individual stocks and bonds are respectively owners of, and lenders to, a business, whereas investors in mutual funds hold shares of those funds, rather than the individual companies held within those funds. Having a good grasp on the nature of your investment and how that impacts your thought process is the first step.
Understand the Position’s Location
Where is the asset held? The holding’s location in an individual taxable brokerage account versus a mutual fund held within your retirement plan will impact the effects of a sale.
If the holding is within a trust, you may not have the authority to make an investment change at all.
What About Asset Allocation?
Your portfolio—the collection of all your investment types and accounts—is typically designed with a particular asset allocation in mind. This combination of investments— typically stocks (equities) and bonds (fixed income)—should be matched to your investing goals, risk tolerance, and time horizon. When you sell a position in your portfolio, your asset allocation shifts. Understanding how a decision to sell a position will impact your asset allocation is part of prudent investment management.
What Are the Tax Implications?
Sales of investments in individual taxable accounts will incur taxable capital gains or losses, while sales within tax-advantaged retirement accounts will not. Incurring capital gains increases your total taxable income, which affects multiple parts of your financial picture. Consult with your financial advisor for a complete understanding of the ramifications of investment decisions.
Will This Actually Make a Difference?
Stock shareholders own tiny slices of companies. Selling your slice on the
secondary market—where it will get snapped up by another investor—has a limited impact on the company’s well-being. Sales by institutional investors and asset managers, including mutual fund companies, can make a larger impact more quickly. Nevertheless, a significant sell-off by individual investors will get a company’s attention and can influence its market value. Keep in mind that selling a share of a mutual fund eliminates all of the positions within that fund, along with the one(s) you deem unacceptable.
The Possibility of Shareholder Advocacy
A continued ownership share through a stock gives you a voice in company decisions through the ability of shareholders to file resolutions at the company’s annual meeting and to vote on those proposals. These proposals receive the attention of the company’s management and can make headlines as well. As a larger shareholder, a mutual fund that holds a position you find questionable has a greater voice in filing resolution proposals and proxy voting. Shareholder advocacy can create change, and it can be a compelling argument for retaining a position. Ask your advisor to research what your mutual fund’s manager is doing to effect change in those positions, if anything.
Actively Managing a Portfolio
Creating and managing your own portfolio, which includes selecting and excluding particular companies, requires sustained attention, expertise, and a level head. Working with a financial advisor who actively manages a portfolio of individual investments, including regularly reviewing your holdings for ones that you find objectionable, will likely cost more than an advisor with a more passive management style. Talk with an advisor to understand the options they offer. Investors who wish to align their investments with their values have several factors to consider when selling an investment due to political views or other personal reasons.
Make sure you move forward with the information or professional assistance that you need to make the right decision.