Risk and Return

Alea notices that a widely cited paper claiming that Democratic Presidents are better than Republican presidents for the stock market doesn’t hold water:

This paper shows that the statistical tests applied by the authors of the study were wrong, and that, once corrected, the difference in stock market returns under different presidential regimes is not meaningful.

The lessons of the paper extend well beyond the presidential effect and emphasize the importance of proper research design in carrying out statistical investigations.

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Technorati Tags Democrats, investing, markets, Presidential effect, Presidents, Republicans, research

Tags: Democrats, investing, markets, Presidential effect, Presidents, Republicans, research

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