Should Investors Pay Attention to Domestic and US Election Regimes? A Canadian Perspective

  •  Claudia Champagne    
  •  Stéphane Chrétien    
  •  Frank Coggins    


Based on Canadian historical returns from 1951 to 2011 and mean-variance frontier analysis, we document better stock market opportunities in the late versus early part of the mandates of the Canadian federal governments or the American presidents, as well as when Democratic versus Republican American presidents are in power. Better bond market opportunities are found in majority versus minority Canadian parliaments and in Conservative versus Liberal federal governing parties. We investigate the role of controls for the state of the economy to explain these results. We conclude that both domestic and American electoral regimes significantly affect investment opportunities and optimal asset allocation.

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