Can You Really Turn Electoral Politics Into Market Gains?

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Democrat Donkey and Republican Elephant symbols on political buttons.
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The midterm elections on Nov. 4 draw attention to an interesting question for investors: Does it make sense to invest your money where your political beliefs lie? A company called Motif Investing offers some interesting conclusions.

Are Politically Active Companies Good Investments?

Motif offers members a way to invest in themes that it identifies with stocks that it selects and apportions. In essence, buying a motif is like investing in a tailored exchange-traded fund, except that you have more flexibility in deciding how you want your money invested.

Motif allows members to create their own motifs but also has set up some of its own. The company established on motif focused on major donors to Democratic campaigns and another investing in companies that give heavily to Republican candidates.

Interestingly, both strategies have dramatically outpaced the broader stock market's return since they were established in mid-2012. The Republican Donors motif -- which includes stocks like delivery specialist FedEx (FDX), defense companies Lockheed Martin (LMT) and Northrop Grumman (NOC), and big banks Goldman Sachs (GS) and Bank of America (BAC) -- has produced returns of almost 75 percent, easily beating the 50 percent returns from the S&P 500 (^GPSC).

Returns of the Democratic Donors motif have still outpaced the broader market. The companies in the Democratic camp -- which include tech giants Microsoft (MSFT) and Google (GOOG) (GOOGL) as well as media empire Comcast (CMCSA) -- have returned almost 70 percent in the past two years or so.

Looking at the Issues

Another way Motif has tested politically inspired investing is through specific issues. One of the most popular has been Obamacare, with two motifs taking opposite sides of the debate.

The Obamacare motif was designed to focus on sectors of the stock market that would arguably benefit most from the Affordable Care Act, including hospital stocks, providers of Medicaid services, generic drug-makers, pharmacy benefits managers and providers of electronic medical-record services. It has produced returns of between 70 and 75 percent since late 2012, topping the 40 percent return of the S&P 500.

On the other side of the coin, the Repeal Obamacare motif has had a very different experience, underperforming the S&P 500 by 25 percentage points since it was created at the beginning of 2012. This motif concentrated heavily on makers of diagnostic testing equipment and medical devices, which in some cases had to pay excise taxes and saw cuts in reimbursement rates as a result of the Affordable Care Act, and the fact that Obamacare hasn't been repealed suggests that these companies' fates were indeed linked at least to some extent to whether health care reform would take root.

Stay Smart With Your Investments

There's no doubt that what happens in the political world has an impact on your investments. By identifying stocks that are most closely connected to the issues that are most important to you, you can make your own decisions about whether the political machinations leading up to the November elections offer you an opportunity to boost your profits from your investing portfolio.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google Plus. He owns warrants on Bank of America and class-C shares of Google. The Motley Fool recommends Bank of America, FedEx, Goldman Sachs and Google (A and C shares). The Motley Fool owns shares of Bank of America, Google (A and C shares), Lockheed Martin, Microsoft and Northrop Grumman. To read about our favorite high-yielding dividend stocks, check out our free report.

7 Valuable Things You Can Get for Free
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Can You Really Turn Electoral Politics Into Market Gains?
The days of the bubble are long past, and with them, companies whose "business" model involved giving away free stuff in hopes of attracting "eyeballs" to their websites. (Remember when would allow you to buy groceries and gasoline for less-than-cost -- for no particular reason?) But the business practice of giving away sample products in hopes you'll try, then buy, still has some merit. Kiplinger's highlights two websites that compile lists of goodies you can get free:
  • as of this writing features free samples of Nesquik chocolate milk, Arm & Hammer toothpaste and Dove shampoo among its front-page offers.
  • currently tells you how to pick up a free cookie at McAlister's Deli and a free photo magnet from Shutterfly.
Restaurants are another great place to pick up freebies -- although you may need to keep a close eye on your calendar. Surveying just a few of the offerings, Kiplinger's notes that on National Pancake Day (Feb. 28 next year), DineEquity's (DIN) International House of Pancakes serves up a stack of free pancakes. Only July 11, 7-Eleven hands out free Slurpees. And to help take the bite out of tax day, Cinnabon offers up two free Cinnabon Bites.
After scarfing down a Cinnabon (much less two), dessert is probably the last thing on your mind. But for incurable sweet-tooths, Kiplinger's points out that Dairy Queen has a loyalty club that entitles members to buy-one, get-one-free Blizzards. And one day a year, Ben & Jerry's gives away free cones of ice cream during Free Cone Day. (Kiplinger's notes that this "usually" happens in April.)
Pep Boys (PBY) will rotate your tires, inspect your brakes and track down what makes that annoying "check engine" light keep turning on -- all for free. Now, you may have to sign up for a Pep Boys' loyalty card to take advantage of this. Pep Boys also use the free services as a way to lure you into its stores, and these "free inspections" are a great way to encourage you to pay Pep Boys to repair these problems. Like the saying goes, there's no such thing as a free lunch. But jumping through a few hoops may not be too high a price to pay for "free."
Free health care, anyone? Kiplinger's points out that under the Affordable Care Act, "most health plans now must provide a variety of preventive-care benefits free." These include "screenings for high blood pressure, mammograms for women older than 40, and routine vaccinations for children, as well as a long list of other tests and services." Granted, taxpayers are paying for all of this -- so in a sense it's not actually "free." But if you're a taxpayer, you've already paid for it, so you might as well get what you've paid for.
There's hardly a parent in America these days who would argue that college doesn't cost too much. But sometimes it's free. Kiplinger's notes that Berea College, in Berea, Kentucky, provides all students a four-year tuition scholarship that amounts to nearly $100,000 in value. Berea's website promises this: "Every Berea student is awarded our Tuition Promise Scholarship." Admission to Berea is "highly competitive," of course. But if you get in, "the actual cost to students and their families is $0."
And now for our final freebie (although to be honest, Kiplinger's offers many more ideas, some good, some not so good): Free language training. For those who don't make the cut at Berea, or who just want to add some specialized knowledge to their brains but leave the official sheepskin on the sheep, Kiplinger's points out that you can get free foreign language lessons online at and at the website of the Foreign Service Institute. To which we'd just add that you can get even better free language training at DuoLingo and get free lessons in just about everything else at
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