After Donald Trump was elected in November 2016, many investors took stock with optimism or pessimism about the future of the market determined to a significant extent by one’s political leanings.
And a new working paper for the National Bureau of Economic Research that analyzed portfolio holdings of millions of households shows that as a general rule Republicans were rewarded with a more successful run ever since.
The authors, from MIT’s Sloan School of Management, determined that Republicans were more optimistic about the former real estate tycoon’s economic policies and thus invested more in assets that relied on economic performance.
Democrats, in contrast, opted for investments in bonds and cash and did not reap the benefits of a surging market. “Since Trump’s surprise victory on Nov. 8, 2016, the S&P 500 Index returned more than 40 percent, including reinvested dividends, trouncing the performance of fixed-income assets,” writes Bloomberg‘s Reade Pickert.
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