The young gentlemen in Wall Street here shown engaging in, as always civilized, give and take, over bulls and bears and politics.
The reader may be of my Party, or of the other Party, but it is worth noting here that when it comes to one’s own money, one is correctly cautioned to keep political and other passions hard at bay and ask simply: who reliably delivers more cash to me?
To aid us as we are thinking on that question, we are most grateful to young Marc Lichtenfeld, Investment University Senior Analyst, for providing us the following charts and analysis of how the equity markets have performed, during the Presidential terms of the two principal political Parties over a span of 100 plus years, making allowances for variables of importance such as the Party control of Congress and the like.
I proceed now to quote, liberally, young Marc Lichtenfeld and I thank him for his note and most useful information:
I looked at the performance of the Dow Jones Industrial Average starting at the beginning of every presidential administration, going back to 1901. The S&P 500 data began in 1929 (including a proxy for the index before it actually started in 1957).
I also broke it down further to see what effect having a Congress that was the same or opposition party would have on the results.
Lastly, I wanted to get a sense of the long-term impact of the administration’s policies. A President’s actions don’t only impact the economy from inauguration day to inauguration day. They can have a long-lasting effect.
For example, some say President Clinton is the recipient of the good fortune that was a result of President Reagan’s policies. The argument can also be made that President Obama is suffering through the malaise caused by President George W. Bush’s mistakes.
The first table shows the performance of the Dow and S&P 500 with a Republican or Democrat President. There were 15 Republican terms and 13 Democrat.
Presidents
| Republican | Democrat | |
|---|---|---|
| Dow Jones Industrial Avg. | ||
| 1 Year | 5.61% | 8.30% |
| 3 Year | 20.85% | 30.32% |
| 5 Year | 49.49% | 42.72% |
| 10 Year | 110.05% | 109.10% |
| S&P 500 | ||
| 1 Year | 0.9% | 15.04% |
| 3 Year | 26.50% | 49.75% |
| 5 Year | 48.25% | 68.48% |
| 10 Year | 171.22% | 206.64% |
According to the numbers, when it comes to the Dow Jones Industrials, Democrats appear to be better for the market in the short term, while Republicans are in the intermediate term. Long term however, the results were identical.
In the broader S&P, however, the market performed way better under a Democrat President across all time periods studied.
Now, let’s take a look at how Congress impacted the results.
| Rep. Pres. w/ Rep. Congress | Dem Pres. w/ Dem. Congress | Rep. Pres. w/ Dem. Congress | Dem. Pres. w/ Rep. Congress | Rep. Pres. w/ Split Congress | Dem. Pres. w/ Split Congress | |
|---|---|---|---|---|---|---|
| DJIA | ||||||
| 1 Year | 8.61% | 9.77% | -1.23% | 25.05% | 15.26% | -24.65% |
| 3 Year | 1.73% | 33.88% | 25.27% | 87.90% | 66.97% | 11.52% |
| 5 Year | 40.20% | 45.90% | 41.14% | 69.30% | 142.39% | -15.65% |
| 10 Year | 11.15% | 111.03% | 163.42% | 135.37% | 338.12% | 63.49% |
| S&P 500 | ||||||
| 1 Year | -3.89% | 14.71% | -0.23% | 34.03% | 13.94% | N/A |
| 3 Year | -19.03% | 44.52% | 26.59% | 108.60% | 53.70% | N/A |
| 5 Year | -28.17% | 92.29% | 47.91% | 67.07% | 126.43% | N/A |
| 10 Year | -19.11% | 253.69% | 188.62% | 125.58% | 277.21% | N/A |
A couple of notes:
The sample sizes of a split Congress (meaning the House and the Senate were controlled by different parties), were very small. Only Ronald Reagan’s two terms in office for the Republicans and Woodrow Wilson’s second term for the Democrats.
For the Dow, Reagan’s two terms blew all other combinations away across every time period except five-year performance. When you add the S&P 500, Reagan’s five- and 10-year performance was best, but shorter term, investors did better with a Democrat in the Oval Office and Republicans in control of Congress.
If you eliminate Reagan’s term so that only larger sample sizes are used, a Democrat President with Republican Congress had the best one-, three- and five-year performance in the Dow. The 10-year champion was a Republican President and Democrat controlled Congress.
For the broader S&P 500, the market climbed much higher when a Democrat was in the White House. Short- and intermediate-term performance was enhanced when the Democrat President had an opposition Congress.
But perhaps the most surprising results were that long-term performance was much stronger when the Democrats were firmly in control of the government, returning 253.69% over 10 years or an average annual return of 13.57%.
The perception is that Republicans are more pro-business. I think their policies and plans back that up. But at least as far as the market is concerned, over 100 years of results suggest you’ll make more money on your stock investments with a Democrat in the Oval Office.
How much of it you’ll get to keep is another story due to differing tax proposals.
Lots of factors go into who Americans select as their President. Foreign policy, tax policy, social issues, etc. The stock market is usually not a big consideration. If it was, George W. Bush wouldn’t have had a prayer against Al Gore, as the market more than doubled under Clinton’s last term. And Mitt Romney would be the Republican equivalent of Walter Mondale after President Obama’s 69.6% bull market.
I here cease to quote from young Lichtenfeld and again thank him for his very useful seasonal note to us.
It seems to me that young Lichtenfeld‘s message very much mirrors my own: buy and hold good quality stocks!!!! And this message is likewise redolent of my aged uncle’s long ago admonition to me: “Little Giovanni, the most important thing in life is not money. The most important thing in life is MY MONEY!!”
JOHN DANIEL BEGG 
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Bernie–I completely agree–but that isn’t going to happen–it’s a rigged deck and while I think a real revolution is a possibility, in the mean time, in between time, the way money guys approach this madness is to get what they can while they can–and, that being said, the young man who provided the data provided an answer to the extent there is one–buy equities–they factor inflation and all manner of other things into their prices–the last 4 years they have run up nearly 70%–admittedly–complete speculation–gambling–and coming off a complete collapse in 08–but from the standpoint of an icy-eyed investor–this is likely the safest way to make money–Happy Christmas and New Year–John–also–read this:
https://johndanielbegg.com/2012/12/20/mr-romneys-47-v-50-edges-ever-close-to-the-50-yard-line-a-fiscal-abyss-from-which-no-return-is-possible/
John, equity markets globally have been inflated by the QE-to-Infinity policies of Central Bankstas. How else does one explain the doubling of the Dow, S&P, etc. since 2009? Have corporate profits doubled, or has economic output recovered to its previous high? No. Equity markets are dangerously overvalued, as are most bond markets. 2013 is unlikely to be kind to any equity market, given the historic precedent that coincides with the first year of a new President’s term.
Finally, if you haven’t already, compare the 10-year rate of return for the broad market averages – Dow, S&P, etc. – against gold. The results aren’t even close, and gold has a lot further to go, given the Fed’s nonstop counterfeiting operation.
Have a very Happy and Prosperous 2013.
Bernie–once again–equity markets are vastly over-priced calibrated by the way we learned to value stocks as kids–I agree–the distinction I would make is that after the Panic of 2008, the market became a completely different place. There is no longer even the pretense of equity prices connected to market fundamentals-it’s solely a gambling den–a dice table. That said, the profits in the past 4 years are real money and many are getting pretty fat on that–up nearly 70% since the Panic. The expiration of the capital gains 15% tax is troubling but people have to go somewhere for profit and the equity markets–better than any other asset base– have a built in gauge against the depreciation of the money, inflation and so on. It really is the only game in town.
I am long familiar with the gold story–I’ve often wondered just what people who have physical gold are going to do with the stuff in a time of real melt down? The metal has no recognized value in the economy unless converted to paper currency and, more pressingly, how soon do you think it will be before thieves find out you have it? You can’t use it to buy anything directly so I fail to see its use beyond ornamentation–when I was active, before my surgery, I made stacks of cash in Peru and Argentina in agricultural ranches and industrial mining ventures and stocks–all to serve Chinese end-users. The Chinese have no interest in the yellow metal and I found it far too pricey for my purposes as it has no industrial applications–I do like silver a bit however–which does have such applications. I had relatives who were gold bugs when we were young and I always asked “If the sky does fall in, what are you going to do with the stuff–buy a cup of coffee with a double eagle–and, if so, who is being cheated?” As Uncle Bennie at the Fed said to Dr. Paul at hearings “gold of course is an asset, but it does not work, it cannot work, as currency itself.” I greatly dislike Bennie, but he is right on that.
I do have an article that I think you might like as a Libertarian–here it it:
https://johndanielbegg.com/2012/04/04/the-poor-are-very-special-to-god-and-democrats-pretend-to-care-for-them-10/
God Bless and God Speed!!
John
Neither the GOP nor the Jack Ass Party have “provided” anything to investors. What they have DONE to investors is expand beyond comprehension the Federal debt load of IOUSA, debased our currency by abandoning the Gold Standard, exploited the productive and severely curtailed personal freedom.
The only real alternative to either of the indistinguishable mainstream parties is the Libertarian Party.
Bernie–I have sent a reply and another note for you likely– simultaneously to yours here–have a look–John