Week In Review: Teaching Points

Recap

From time to time, it is instructive and educational to reprint past writings.

Review

With the endless political discussions on budget deficits, debt, debt ceilings, etc. etc. the Best of The Week in Reviews from November 3, 2008 has some good “teaching points” (pun intended!!).

What To Do

The Week in Review November 3-7, 2008 (REPRINTED) The People of our Democracy have chosen to elect Barack Obama as Our Nations next President. We are certainly not about to comment politically on the implications of electing Barack Obama as President. We will, however, comment on the implications of a Democratic President coupled with a Democratic Congress, and the likely effects on the stock market and your portfolio. First and foremost here are the facts. All percentage gains in the stock market are total returns (capital gains + dividends) for the S&P 500 Index. Only taking into account a Democratic President = +15.6%. Only taking into account a Republican President = +11.1%. Only taking into account a Democratic Congress = +11.9%. Only taking into account a Republican Congress = +19%. Taking into account both the Presidency and Congress. Democratic President with Republican Congress = +20.2%. Republican President with Republican Congress = +17.5%. Democratic President with Democratic Congress = +13.8%. Republican President with Democratic Congress = +10.3%. You can read the above statistics, and make your own conclusions. Personally, I do not give much credence to the above stats simply because there are just too many other variables that are being left out of the equation. The most salient being; wars, technological innovations (like the internet), and financial crashes like what we are experiencing right now. Conclusion, the party of the Presidency and/or Congress has as much to do with the direction of the stock market as the winner of the Super Bowl or the butter production in Bangladesh. Both of these indicators have a very high correlation coefficient with the US stock market; yet, obviously, absolutely nothing to do with why the stock market rises or falls.

Quote of the Week

“If politics is like religion, then leave them both out of investing!” Jason R. Clark

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Clark Brothers Investments
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www.clarkbrothersinvestments.com