It is important to understand that the financial industry is a very powerful business that has a long-standing history of getting what it wants from its regulators - namely, deregulation. Thanks to the US Supreme Court’s 2010 decision known as the Citizens United v. Federal Election Commission, which lifted restrictions on how much money firms could channel to political contributions, Wall Street bankers ended up being the largest political contributors in 2012 (Blinder, 2013). Given that politicians have to raise money to run for public office, bankers have gained additional influence on the way key details of laws are written.
Innovative and money-hungry financiers go to work every day with the goal of finding opportunities that make them as much profit as possible. Bankers do not want to miss a single chance to capitalize on either small or big opportunities. Keeping that in mind, a very LT investor should thus remember that one of the best predictors, one of the best forward-looking indicators of upcoming booms - and busts - is found exactly where regulation is nonexistent or scarce. A very LT investor would thus first and foremost be an expert on financial regulation, and on the areas that lack sufficient regulatory coverage.
SourcesBlinder, A. (2013). After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead. New York, NY: The Penguin Press. Bank for International Settlements (2013). Retrieved from http://www.bis.org/statistics/derstats.htm