ITA Wealth Management

Harry Truman once said, “If you want to live like a Republican you’d better vote like a Democrat.” Which party is best for the stock market? Is there a statistical difference to market returns and risk when the country is controlled by one party over the other? Contrary to popular belief or urban myth, the results may astound many readers. Here are two references that point out the differences when the different parties are in power. Read on.

http://money.cnn.com/2004/01/21/markets/election_demsvreps/

The above link is an article written by Alexandra Twin, a CNN/Money Staff Writer. In her article, the academic article reference below is mentioned. Note the graph in the article ends in 1999. The market from 2000 through today would further depress the Republican record as the annual return is approximately 1% for the past eight years.

http://personal.anderson.ucla.edu/pedro.santa-clara/Politics.pdf

The above link takes one to the academic paper supporting the summary provided in the “popular” article.

And here is another article I recently found.

Lowell Herr

Photograph: Lucy, poodle belonging to daughter-in-law

Premium Content subscription available for $6.99 per month.

Investors interested in digging deeper into the nuances of asset allocation will find the following five books of interest. Here is my list of the five best books on asset allocation.

• The Four Pillars of Investing: Lessons for Building a Winning Portfolio
• Asset Allocation: Balancing Financial Risk
• Index Funds: The 12-Step Program for Active Investors
• All About Asset Allocation: The Easy Way To Get Started
• The Intelligent Asset Allocator

William Bernstein, of Oregon, is the author of my number one and number five picks. Actually, The Intelligent Asset Allocator is my favorite, but I would not recommend it as the first to read as the others are better for readers not as familiar with the asset allocation language. Begin your journey with The Four Pillars.

Roger C. Gibson, in his Asset Allocation (number two pick) book does a remarkable job of showing why one should build a diversified portfolio. However, I am still waiting for an author who will provide compelling data for using over ten different asset classes.

Mark T. Hebner provides one of the best overviews for passive or index investing. In his Index Funds book, Hebner goes into the history and research for this approach to investing. If cost is an issue, this book is a best buy. I also recommend visiting the IFA web site as it is one of the very best available. I provide a link off to the right under “Links.”

Richard A. Ferri, in his All About Asset Allocation book, fulfills the goals of the book title. Ferri supports our contention that a portfolio should be tilted toward the value side of the market spectrum. In this book you will learn why asset allocation is the most important investment decision you will make.

The Intelligent Asset Allocator is one of my all-time favorite investing books. Complete your summer, fall, and winter reading with this book. Bernstein has a writing style that will leave you smiling despite the challenging material.

If anyone has a favorite book on asset allocation, please add it to this list under the comments section. Your contributions are most welcome.

PS  The trial offer for subscribing to Premium Content will extend through tomorrow, 8/8/2008.

Lowell Herr

Photograph: Lima, Peru students taking a snack break.