government intervention and stock returns
DESCRIPTION
Should equity investors be alarmed by the prospect of greater government intervention in the US economy? Lets look at some examples of US intervention in the past and examine the record of stock returns around the world over the last thirty-nine years. The evidence suggests that government intervention is just one factor among many affecting stock returns, and that an above-average degree of intervention is not necessarily associated with below-average returns.TRANSCRIPT
Government Intervention and Stock ReturnsGovernment Intervention and Stock ReturnsRichard Reyes, CFP
The Financial Quarterback/Investor Coach
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Newsweek February 16, 2009
“Whether we want to admit it or not …the America of 2009 is
moving toward a modern European state.”
“More government intrusion in the economy will lamost surely
limit growth.”
Time July 14, 1975
“As capitalism approaches its bicentennial, it is beset
by crises.”
“Inflationary recession is more likely than anything
else to make voters turn to an authoritarian fascist or
socialist system.”
December 28, 1917
President Woodrow Wilson issues presidential order assuming control of railroad industry.
US Railroad Administration divided into seven regions.
March 1920
Industry returned to private ownership
May 18, 1933
Roosevelt signs Tennessee Valley Authority Act.
January 1938
Supreme Court rules TVA has right to build power plants in competition with private industry.
1941
TVA becomes nations largest power producer.
April 1944
Roosevelt orders seizure of Chicago mail-order firm Montgomery Ward & Co. amidst labor dispute.
CEO Sewell Avery refuses to cede control and is forcibly removed from his office by US Military police.
June 21, 1970
Penn Central bankruptcy is largest in US history.
Passenger rail service continues under Amtrak; freight service under Conrail
1998
Conrail returns to private ownership
May 1984
Continental Illinois Bank fails.
Largest bank failure in US history at that time.
80% owned by US government until acquired by BankAmerica in 1994.
