22 June 2010

Investment Strategies of Party Loyalists

Here is a curious little chart I created to compare stock market performance by party between the time that Teddy Roosevelt took office and yesterday's close.

Imagine that you have two rabidly political families whose allegiance to their party is so strong that each time one of their own take the presidency, they put all their money into the market (as measured by the Dow Jones Industrial Average). And each time a president from the opposing party takes office, they sell their stocks and put their money under a mattress.

The simple question this answers is, Who would fare better? As you can see in the chart below, the Democratic faithful would have done much better in the last 110 years. Much better. While the Republican family would have grown their $100,000 to $509,720, the Democratic family would have grown their $100,000 to $2,796,037, about 5.5X more. (click on the chart below to make it bigger)

Of course you could say that the market does what the market does and the parties - much less the president - have little to do with it. Or you could point out that the best policy would be to invest during administrations of presidents whose last name start with a "C" (Coolidge and Clinton) or "R" (Reagan and Roosevelt), regardless of party.

You decide what to make of it. Today I'll just offer the numbers. Discuss it among yourselves.

1 comment:

Beth said...

So I should vote for the US President using the same method I use for betting on horses. Makes sense to me.