Who is better for the Stock Market: Democrats or Republicans?

Who is better for the Stock Market: Democrats or Republicans?

September 09, 2012

J.P. Morgan’s June, 2012 Guide to the Markets report detailed the affect on stock market returns of political control of the White House, Senate and House of Representatives from 1940 to 2008.

The results are surprising.
According to the report, the stock market performed best when the President was a Democrat. The weakest returns occurred with Republican Presidents.

This table summarizes the five different combinations and the resulting stock market return.

Controlled by
White HouseDemocratsDemocratsRepublicansRepublicansRepublicans
Average Stock Market Return17.2%13.4%9.5%7.6%5.7%

Column 1 seems to indicate that gridlock is good for stocks; column 4 leads to the opposite conclusion.

It seems to me that the common thread is that Democratic presidents are best for stock market returns. I do not know why that would be true.

The returns do not include reinvested dividends.

This presentation is for educational purposes only. The information presented here is not specific to any individual's personal circumstances. To learn more about the strategies mentioned and if they are suitable for you, consult the appropriate professional before implementing. Arthur Stein Financial, LLC does not provide tax or legal advice.

Any information provided in this presentation has been prepared from sources believed to be reliable, but is not guaranteed and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for information purposes only and does not constitute a recommendation.

Keep in mind that:

  • Past performance is no guarantee of future performance;
  • To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. Tax laws can change at any time;
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  • “Average annual return” evens out variations in the actual year-to-year returns.
  • Both stock and bond mutual funds and individual stocks and bonds fluctuate in value and there will always be times when they lose value.
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