Stock Market Returns and Politics A Historical Analysis  

Donald W. Capone III, CFA

10-1-2008

Since the election is just around the corner we took time to look back and review a few items concerning the market returns with regards to our last presidents’ and the tax rates associated with each era.

This article is strictly meant as an analysis and is 100% analytical.  We do not have an opinion on this matter other than the facts. 

On November 4th, 2008 the Presidential election will be held. For the first time in many years much of the political landscape has many uncertainties.  Given our interest in the capital market returns we did a little digging to find out what affect, if any, a certain party could have on our capital market results.

Please remember there are many outside factors that may result in economic good or bad times, but the president is the leader and ultimately drives much of the decision making not only during his term but for many years to come with many of his decisions.

First we looked at which party has had office over the last 56 years, our term of research.

 

As you can see from above the Republican party has been in office 36 of the last 56 years, nearly twice as often as the Democratic party. 

What follows next surprised us greatly, not necessarily the results, but the magnitude of difference.

The S&P 500 average for Republican term is 8% while the average for a Democratic term is 15%.  (This is again over the last 56 years.)  Stock market returns were dramatic during the 90’s and most of this decade was held by the Democratic party.


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