Red vs. Blue Is Dividing Stock Portfolios Like Never Before

A political gap in optimism about markets is translating into trading decisions

By Gunjan Banerji of The WSJ. Excerpts:

"Democrats who expected stocks to tumble over the next six months exceeded Republicans by 59 percentage points. Republicans expecting stocks to climb over that period topped Democrats by 47 percentage points."

"One wealthy couple, who weren’t fans of Trump’s policies, asked Sadkin [David Sadkin, partner at Bel Air Investment Advisors] about moving all assets abroad, fearful that American assets from U.S. stocks to bonds to the dollar would tank on the president’s watch." 

"The 47-point gap in partisan optimism regarding the stock market’s trajectory is the largest divide observed in Gallup data provided to The Wall Street Journal going back to 2001. That year, during George W. Bush’s presidency, the optimism gap between Republicans and Democrats stood at 13 percentage points."

"A group of researchers in a study analyzed securities filings for local independent investment advisers in 309 U.S. counties and found that wealthy people who lean Democratic or Republican are choosing different stocks."

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See also Americans start caring more about deficits and the national debt when the party they oppose runs them up by John V. Kane of New York University and Ian G. Anson of The University of Maryland. Excerpt:

"In the past two decades, US budget deficits have skyrocketed, and the national debt is now over $22 trillion. But do Americans care about the size of deficits and the national debt? In new research, John V. Kane and Ian G. Anson find that people tend to care more about the deficits and debts when they are increased by presidents from the party that they oppose. Both Republicans and Democrats, they write, become less concerned about governments running deficits when their President is in charge."