It's a Voters' Market

Portfolio allocation is as important in politics as it is in finance. This applies on the individual level - one's allocation of votes in the ballot booth on election day - and on the macro level - how the voters collectively weigh their party allocations and split or unify party control of the various branches of government.

An alternative approach is individual stock selection - analogous to picking the best candidate regardless of party or the likely outcome in splitting Congress and the White House.

Investment advisers often say that the distribution of one's holdings among stocks (blue chip, small cap, foreign holdings), bonds, and cash may be more important than the specific instruments held. They then apply risk tolerance factors, a time horizon for letting the portfolio grow, and so forth.

A citizen can take an allocation approach like this in voting. In Massachusetts, what has turned out to be an excellent Senate race between incumbent Democrat John Kerry and his Republican challenger, Gov. Bill Weld, offers state voters a strategic choice. The men are well matched in ability and training. Mr. Kerry represents the Democratic theme of fairness to the less advantaged, and Mr. Weld mixes liberal positions on social issues like abortion and gay rights with tax-cut fiscal conservatism. Voters here may decide there already is enough Democratic liberalism in Washington and vote to shake up the GOP social conservative monopoly in Washington by sending Weld instead.

In presidential races, I would argue, the principal change for the next four years is made on election day. What the winner himself does the next four years may be less important.

For example, it is often said that Jimmy Carter's presidency was a disappointment. His decisive loss to Ronald Reagan is taken as an illustration of failure.

But the fact of Mr. Carter's election in 1976, of itself, made decisive changes in American political life. Carter's election as a Southerner gave the Democrats a Southern base that had been all but lost - one on which another Southerner, Bill Clinton, is able to build today.

Carter brought a period of civility, of regular folks access (whatever one thinks of Carter's sweater-before-the-fireplace ploys) to the White House after the Nixon imperial presidency (Jerry Ford too gets credit here). And Carter demonstrated how to go from "Jimmy who?" to the Capitol inauguration by astutely playing the caucus and primary game.

President Clinton's initial election set the stage for more diversity in the Cabinet (with some startling abandonments of nominees), an attempt at co-leadership with a spouse (since rebuffed), and a lower threshold for standards like marital fidelity, as voters chose to vote their pocketbook and abandon the Reagan-Bush era.

Given where the economy is, the current race is a status quo election. It is hard to see how a vote for Bob Dole would change things for the better. And Mr. Clinton will stand pat.

In fact, right now may be as good as it will get for President Clinton, should he be reelected. His popularity and performance ratings are high. The misgivings about his character, and the campaign finance questions related to foreign contributions to his party, are still in the assertion stage. Second terms are hard to navigate without scandal or unanticipated reversal (Vietnam, Watergate, Irangate).

Running mate Al Gore's stock for the year 2000 nomination may be worth much less by then. As one Wall Streeter says, Tuesday may be the time to sell Clinton-Gore, when it's at its market high.

*Richard J. Cattani is editor at large of the Monitor.

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