Friday, December 18, 2015

Do Democrats in the White House Mean Higher Stock Returns?

Over the last 50 years, according to a Democrat promo making the Internet rounds, stocks averaged an 11% annualized return when a Democrat occupied the White House. And when a Republican sat in the Oval Office? Less than 3%.

Democrat Commanders in Chief do go hand in hand with better stock returns. Here we linked to a 2008 NY Times comparison going back to 1929.  The performance gap is pronounced. Even so, "hand in hand" isn't necessarily the same as cause and effect.

Because the Republicans retain a reputation as the party of fat-cat billionaires, the gap in stock market returns is counter-intuitive. Which may explain why some investors don't believe it.

Current example, this Well Fargo survey of investors: Only 15% believed a Democrat in the White House would be better for the stock market. Twice as many thought they would profit more from a Republican.

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