Posted by: twotrees | October 2, 2013

Closed for Business?

charts

Today represents a failure of our political system.  it’s the first day of a partial government shutdown brought on exclusively because of political infighting.  Roughly 800,000 gov’t employees are officially in limbo, with no knowledge when or if their job’s or pay will be reinstated.

But how does the stock market react to such perils?  I asked Matthew Jones, a financial consultant in downtown Ventura., who shared with me a number of facts:

There have been 17 governmental shut downs since 1977

They have ranged from one to 21 days in length, with an average of six days.

During the shutdown, the Standard & Poors index has declined an average loss of value of .9%

During the three months after the shutdown, the S&P gained and average of 2.5%.

After twelve months, that increased to a 12% gain.

So it appears that while many on the government payroll feel the financial bite of politicians playing chicken amongst themselves, those who invest in the stock market seem to benefit if they are patient.  Let’s hope this brief interlude ends soon, dammed the S&P.

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