The Party Politics of Stock-Market Investing
36 Pages Posted: 19 Jul 2016 Last revised: 28 Mar 2019
Date Written: March 25, 2019
Does political affiliation matter for stock-market investing? Rare events can produce polarized narratives that potentiate cognitive dissonance on a spectrum of agents. Using a comprehensive dataset of equity hedge funds' performance and managers' political affiliation matched by their partisan contributions, I document higher returns of funds managed by Democrats for ten subsequent months---from December 2008 to September 2009---when the interpretation of the US central bank policy was politically polarized. This result is robust to a set of falsification tests and randomized quasi-experiments.
Keywords: Political Biases, Money Managers Performance
JEL Classification: D72, G11, G14
Suggested Citation: Suggested Citation