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What? A Democrat In the White House is Better For Stocks? November 11, 2011.

Being Street Smart

By Sy Harding

What? A Democrat In the White House is Better For Stocks? November 11, 2011.

The lead-up to next year’s election will bring a lot of claims from both parties. I thought I’d check some likely ones to make sure I don’t fall into the ‘lazy trap’ of repeating popular beliefs as fact when they might not be.

I was more than mildly surprised by my research.

It’s common knowledge, popular belief, historical fact, that the Republican Party is better for business, corporate profits, and the stock market – isn’t it? Democrats are more interested in pushing socialistic programs at the expense of business – aren’t they?

But wait a minute!

The following table shows the Dow’s gains and losses under Republican and Democratic Presidents over the last 50 years.

Over six Democratic terms the Dow gained 247.9%, or an average of 41.3% per term.

Over seven Republican terms the Dow gained 147.1%, or an average of 21.0% per term.

 

President

R/D

Term

Beginning

Dow

Ending

Dow

Gain/

Loss

Kennedy/

Johnson

Dem

1961-65

615.9

874.1

+ 41.9%

Johnson

Dem

1965-69

874.1

945.1

+ 8.1%

Nixon

Rep

1969-73

945.1

1020

+ 7.9%

Nixon/

Ford

Rep

1973-77

1020

1005

- 0.1%

Carter

Dem

1977-81

1005

964.0

- 4.1%

Reagan

Rep

1981-85

964.0

1211

+ 25.6%

Reagan

Rep

1985-89

1211

2168

+ 79.0%

Bush Sr.

Rep

1989-93

2168

3301

+ 52.3%

Clinton

Dem

1993-97

3301

6448

+ 95.3%

Clinton

Dem

1997-01

6448

10786

+ 67.3%

Bush Jr.

Rep

2001-05

10786

10783

-

Bush Jr.

Rep

2005-09

10783

8776

- 18.6%

Obama

Dem

2009-11*

8776

11955

+ 36.3%

*To October 30, 2011.

 

Could it be? Over the last 50 years investors, their portfolios, 401K and IRA plans, have made almost double the returns under Democratic Presidents as under Republican Presidents?

I then went back 110 years to 1900. The same pattern emerged, although the difference was not as striking as it has been for the last 50 years. From 1901 to 1961 the Dow increased an average of 36.7% per term when the president was a Democrat, and 32.1% when a Republican was in the White House.

The influence of one party or the other on the strength of the economy, business prosperity, and the stock market has clearly not been as popular wisdom suggests.

 

 

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.