Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

What Is Bad for the United States Is Good for Stocks


An historical examination of presidents, debt, and stock returns.

MINYANVILLE ORIGINAL It is less than three weeks until the elections. One of the biggest political talking points in recent years has been the debt of the United States. This article will examine the effect fiscal responsibility (or lack thereof) has on stock market returns.

Dividends were ignored in this study for the sake of simplicity.

We are interested in the change of debt, not the deficits. The difference is "off balance sheet" items (the most notable of which is Social Security). The debt is $16 trillion. Adding all the annual deficits and surpluses from 1789 onward equates to only $10.7 trillion.

Here is the big picture chart, which runs from December 31, 1789 to September 30, 2012:

War is devastating to surpluses. The effects of the Revolutionary War, the War of 1812, the Civil War, World War I, World War II, the Cold War, the Gulf Wars, and the Afghanistan War can all be easily seen on the chart. The only time the debt/GDP noticeably increased during peacetime was in the 1930s (due to FDR's social programs).
< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos