The Texas Congressman and presidential candidate, Ron Paul, apparently has good stock picking skills as he is currently outperforming the market by 9%, according to Brandon Pilzner of Benzinga. That is impressive when to take into account that the last few weeks have been extremely tough as conditions continue to deteriorate in Europe. Paul is up 7.1% since 2010, versus -1.9% return for the S&P 500. A large percentage of his portfolio consists of gold, and gold stocks.
Ron Paul has always been an advocate of smaller government policies along with a very negative view of the Federal Reserve. Congressman Paul has been a driving voice behind the growing federal deficit and spending; meanwhile blaming the Fed for “over-inflating” Treasuries.
Most of the “over-inflating” that the Congressman is referring to is the Fed’s “Quantitative Easing” programs in which the Federal Reserve essentially increases the money flow in the markets. We have already experienced two QE programs and there could possibly be a third after the recent unsatisfactory economic news. The problem with having QE3 is that too much easing could lead to inflation, as Ron Paul suggests.
In fact, Ron Paul has suggested that inflation is a “form of government theft” in which consumer’s see their purchasing power decrease along with their savings account. Furthermore, in his argument against the Federal Reserve, Ron Paul has highlighted that the US Dollar has declined 98% since the initiation of the Fed back in 1913.
However, we need to note some things which might upset Paulbots (a derogatory term used for supporters of Ron Paul, many of whom repeat the same simplistic sentences over and over). 9% of this gain came on this past Friday, if you cut that off he is only beating the market by 8%. Furthermore, according to The Atlantic, house members outperform the market by 6%, so Ron Paul is only slightly ahead. Furthermore, we do not know Ron Paul’s record prior to 2010.
Finally, assuming Ron Paul is a good investor does that mean he should be president? If you answered yes, then an even better president would be John Keynes. Keynes was an advocate of Government spending and intervention, which is heresy to Ron Paul’s libertarian school of thought. But Keynes was quite a good investor according to new data.
According to an article by Jason Zweig in the Wall Street Journal, Keynes outperformed the U.K. stock market by 8% annually, adjusted for risk, from 1924-1946. A far more impressive track record than Ron Paul’s, and over a much longer period of time.
So maybe being president is not for Ron Paul, but he can retire and open his own hedge fund. We recently suggested that Nicolas Sarkozy open up a fund if he lost the french elections. Ron Paul could perhaps team up with Sarkozy, after Paul retires from politics.
