Culture wars aren’t just affecting US politics – they’re affecting people’s investments. A recent study, Political Divide and the Composition of Households’ Equity Portfolios, has found the stock holdings of people in Democrat-voting counties is increasingly different from Republican-voting areas.
Political polarisation has been an increasing issue in the US since the mid-1990s, the study notes, but it wasn’t until 2013 that it started to increasingly affect investors’ portfolios. Why 2013? The researchers link it to the rise of conservative media, noting portfolio polarisation invariably increased every time the Sinclair Broadcast Group, a large conservative TV network, moved into a local market.
[ Republican Party's anti-climate agenda threatens cosy alliance with Wall StreetOpens in new window ]
The end result is that investors in Republican areas underweight companies led by Democrat-leaning chief executives. Democrat counties invest more heavily in technology companies; Republican counties invest more in oil and gas companies.
Commenting on the study, Liberum strategist and blogger Joachim Klement says he has no idea whether oil and gas stocks will outperform tech companies in coming years, but one group of investors will likely end up with lower long-term returns.
On the Money: the personal finance newsletter from The Irish Times
Moving your savings into the right bank account could earn you an extra €700 a year on a €30,000 lump sum
Financial wellbeing and literacy across demographics subject of report
Here are 33 places to eat in Ireland that readers say are good value
“Suffering lower returns can happen to all of us and should not be a cause for embarrassment,” says Klement, but “suffering lower returns because of your political views is simply stupid”.
