Belief Disagreement and Portfolio Choice

• DOI: 10.1111/jofi.13179
• Publication Date: 2022-09-18T20:09:20Z
• Authors: MAARTEN MEEUWIS; JONATHAN A. PARKER; ANTOINETTE SCHOAR; DUNCAN SIMESTER
• Keywords: Equity; Ex-ante

ABSTRACT Using proprietary financial data on millions of households, we show that likely‐Republicans increased the equity share and market beta their portfolios following 2016 presidential election, while likely‐Democrats rebalanced into safe assets. We provide evidence this behavior was driven by investors interpreting public information based different models world. use detailed controls to rule out main nonbelief‐based channels such as income hedging needs, preferences, local economic exposures. These findings are a small making big changes, stronger among who trade more ex ante.