Asset Performance During Government Shutdowns: Temporary Volatility Makes This A Good Time To Buy [Charts]

  @lisamahapatra on October 03 2013 11:42 AM
Gold Ingots
Gold ingots. Reuters

The average U.S. government shutdown lasted three days, according to an analysis of the past 17 government shutdowns. The current shutdown has just hit the three-day mark and is showing no sign of ending anytime soon.

This shutdown will likely have a more pronounced effect on markets than previous shutdowns, said Guggenheim’s Scott Minerd, in a report released Wednesday.

“Uncertainty over the drama on Capitol Hill is leading to higher volatility, but weakness in asset prices likely represents a buying opportunity,” he said.

From the report:

“There are a number of ways for investors to take advantage of the political dysfunction in Washington. Historically, equities rally when uncertainty over a shutdown begins to subside, so there is a case for buying stocks, which have fallen in seven out of the last nine sessions. Stifled growth also means that interest rates have further room to leg down, which is supportive of fixed income assets. Finally, there are abundant opportunities for excess returns outside of the U.S. right now, with both European and emerging market equities offering attractive valuations and improving fundamental outlooks.”

Here’s Minerd’s analysis of the past eight government shutdowns in charts:

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