Wednesday, February 6, 2013

Returns by Polictical Regime

I often find new ways of looking at information fun and exciting and I was delighted when a sample of the "Fidelity Independent Advisor" came through the mail last week.  Everyone with a Fidelity brokerage account should have received this newsletter which generally serves as a long-winded advertisement for their other financial products.  Needless to say, I usually through these type of magazines out (although Schwab's is often pretty good).  However, one particular article captured my eye.  It shows the annualized US Stock Market returns of the S&P by political regime.  I clipped a portion of the information below:

You can see that generally speaking, the best economic times occur during a split government.  When you think about it, it makes a whole bunch of sense.  Just like the market, voters like to hedge their bets by having a variety of political views in power.  Hopefully in these situations, more opinions will be heard, and better decisions are made. 

What was even more interesting to me is that our current situation of a Democratic President and a split Congress is almost unprecedented by occurring only 1.2% of the time.  That said, I'm a little wary to believe that there has been enough information to warrant a 9.2% annualized return.  We're talking like maybe 2 years worth of data here.  Also bear in mind that this chart does not necessarily correlate a particular political opinion with prosperity.  The chart is merely just showing what has happened in the past.  Some might argue that it was Republican framework which allowed for Democrat boom times such as with Reagan/Bush 1, and Clinton. 

Either way, this type of information fascinates me, and I hope it interests you as well.

Wonderful Moment of the Day: Lunch with friends.

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