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Which Party Is Better for Stocks?
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Contributor | Patrick |
Last Edited | Patrick Sep 02, 2008 04:22pm |
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Category | Opinion |
News Date | Friday, August 29, 2008 10:00:00 PM UTC0:0 |
Description | I would venture to say that most investors, especially those with substantial portfolios, are Republicans. After all, the GOP is the party that champions free markets, capital accumulation, and low taxes, principles that appeal to wealthy investors.
And historically, the initial reaction of the market to a Republican presidential victory confirms this thesis. During the last 120 years, the Dow Jones Industrial Average rose 0.7% on the day following a Republican victory in the presidential elections while it has fallen 0.5% the day after a Democrat captured the White House
However, a closer look tells a far different story. Over that same 120 year period, the average annual stock market return has totaled only 8.25% under Republican rule, while it has returned 10.85% with Democrats in power.
Over the past 60 years, this trend has been more pronounced. The Democrats have held the presidency only 41% of that time, but under their rule the average annual return has been 15.26%, more than six percentage points higher than the 9.01% return under Republicans. |
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