According to the statistics it seems so! In an article written by economist Jeremy Siegel (Published 9/5 on Yahoo Finance), it appears that over the last 120 year period stock markets have risen 10.85% under Democratic presidencies, compared to 8.25% under Republican administrations. This trend has only accelerated in the last 60 years, with Democrat returns averaging 15.26% per year versus 9.01% Republican returns. What is it about Democratic presidencies that drive markets nuts?
One of the most important lessons from stats class is that correlation does not mean causation. This means that stocks going up may have absolutely nothing to do with which party controls the White House.
Consider a more pertinent example: Republican president Herbert Hoover inherited the White House in 1928, just prior to the great crash of '29. He came to office at the height of speculative mania which it would be difficult to pin on him. The bubble had to pop at some point, and it just so did during a Republican administration.
Next, consider whether or not Bill Clinton had anything to do with the internet revolution that sparked one of the largest speculative stock bubbles in our time? Did his coming to power (instead of a Republican) have any influence in development and commercialization of the internet? Did he have any personal hand in crafting the democratization of finance that led to a revolution in global capital flows? It's 99.9% certain that if someone else came to power at that time these events would have occurred nonetheless.
Market-moving events often occur regardless of who happens to be in a particular office. The tens of thousands of entrepreneurs who brought the internet revolution cared little for which party ran government - each person had his own motivations for bringing innovation to market. Despite the preponderance of data suggesting Democrats are best for markets, I would caution everyone out there from betting your life savings on that premise!
About the Author:
Robert Viglione is a author, investment fund manager, and real estate broker. He founded The Freedom Factory, a popular web forum for the evaluation of topics related to political and economic freedom - two concepts which cannot be decoupled.
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