One of the challenges I face as an investment advisor is that no matter who is President, there is always some portion of my client base that is tremendously unhappy with the current political administration. It then falls to me to park my own ideology at the door and keep whichever group is feeling disenfranchised from letting their political frustrations seep into their investment decisions. 

From that perspective, it has been interesting these past few months watching my Republican clients waving at my Democratic clients as they change seats on the doom-and-gloom train. One of the common complaints I have heard from the former group is a belief that the increasingly activist role of the government in regulating the free-enterprise system will spell doom for the stock market.

On that front, the research folks at Dimensional Fund Advisors recently passed along to me some interesting performance numbers for stock returns of the world’s developed countries in both the past 10 and past 39 years ending in 2008. The data shows that the line between free-market policy and stock market performance is not as clear as many people believe: 

It is interesting to note that, despite the pro-market nature of most U.S. political administrations the past four decades, the returns of the U.S. stock market were in the rear of the pack of the world’s developed nations. Meanwhile, countries such as France, Sweden, Denmark and Canada, whose governments were far more activist in their respective economies during this time, significantly outpaced the returns of the U.S. market.

This is not an endorsement for socialism, of course, and you can draw whatever political conclusions you want. The investment implications, however, are clear: Capital flows to whichever corners of the globe are perceived to provide the most bang for the investment buck, and that investment capital is agnostic about political ideology.