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Old 2008-11-08, 16:19   #747
cheesehead's Avatar
"Richard B. Woods"
Aug 2002
Wisconsin USA

22×3×641 Posts


I apologize for having written that earlier post when I was a bit tired.

Originally Posted by Prime95 View Post
but it can also mean "here's some additional thoughts on the topic". Though you seem to have taken it as the former meaning,
I thought of both, but failed to leaven what I wrote, which came out lopsided.

the market immediately gives Obama a clear vote of "no confidence" in turning things around anytime soon.
Actually, I'm in agreement with market analysts who thought it was more a reaction to specific bad economic news on both days. The market usually discounts foreseeable political news, such as the likely-for-about-a-month Obama win, in advance. That is, its reaction to Obama's win was actually signalled (among the other zillion factors) in its movements during the weeks preceding the election, rather than its immediate two-day post-election action.

Your study is rather well known. However, it is not a basis for an investment strategy.
... but rather a significant indicator of some underlying causes.

As I'm sure you are aware, one must compare all asset classes during the time periods to decide which mix gives you the best risk-adjusted returns.
... and so the study was about not stock prices only, but a total-return comparison with bonds.

Then you need to factor in the significant tax consequences of a strategy that suggests significant changes in asset allocation every 4 or 8 years.
Yes, when one contemplates the total returns from any combination of alternative courses, one includes taxes in the calculations.

Last fiddled with by cheesehead on 2008-11-08 at 16:24
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