Belief Disagreement and Portfolio Choice

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.