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Election Rally: History Suggests Democrats Better for Stocks

Posted Nov 04, 2008 01:09pm EST by Aaron Task in Investing, Newsmakers

The stock market was rallying strongly midday, on track for its biggest election day rally since 1984, Bloomberg reports.

As the market continues its week-long advance, some argue this is evidence of the market warming up to a likely Obama Presidency, while others claim it's merely a snapback from deeply oversold conditions probably.

The answer is probably some combination of the two but, regardless of where you sit on the political spectrum, history shows the stock market fares better under Democratic Presidents vs. their Republican counterparts.

  • Since 1901, the S&P rose an average 7.2% under Democratic presidents vs. 3.2% under Republicans, according to Ned Davis Research.
  • Out of the 10 years of negative stocks performance since 1970, 7 occurred during a Republican-controlled White House versus three under Democrat control, according to Ashraf Laidi of CMC Markets U.S.
  • In the last seven periods when Democrats had complete control of U.S. political power, the S&P 500 rose 14.7% percent on average, according to Bespoke Investment Group.
    In the eight times a Republican was president and Democrats controlled Congress, the benchmark index rose 7.4%.
  • Still, the notion that "gridlock is good" is also borne out, at least in relatively recent history. Of the 28 years of positive stock performance since 1970, 19 occurred during partisan control between the White House and Congress, according to Laidi.

Just some stats (vs. opinions) to keep in mind as you go to the polls and watch the election returns tonight. That said, it's fair to say the current economic environment "really is different" than past election cycles, as Henry and I discuss in the accompanying video.

120 Comments

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:19PM EST

Ya Democrats!!

__A_YAHOO_USER__
__A_YAHOO_USER__ - Tuesday November 04, 2008 01:25PM EST

Market up at 274 point as of now......Market love Obama...

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:28PM EST

As if Clinton had anything to do with boom times in the late 90s like Bush Sr. did w/ the downturn in the early 90s. In all, the fact is no national economy has thrived where the business and the upper class are getting taxed heavily. Otherwise, if this "tax the rich and businesses" plan worked out, Europe, Japan, Canada, and South Korea would have the strongest economies by now..

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:34PM EST

I've already seen a study on this one: The best thing for your money and the markets is when there is a Democratic President and a Conservative Republican Congress and Senate. This is just a bunch of disinformation.

- Tuesday November 04, 2008 01:35PM EST

If the market goes up, it's because of Obama? But if the market goes down it's because of Bush? lol

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:35PM EST

market loves Obama? hummmm,,,,,,higher taxes, wealth distribution, more regulation, protectionism...they must know something we don't.

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:35PM EST

wow, only 2 comments so far. where are the republicans? LOL

georgeg
georgeg - Tuesday November 04, 2008 01:35PM EST

Get the election over so we can focus on Housing and Unemployment. 45% drop in GM sales scares the $%#@ out of me. This little bump does not recover the problems we have...The stock market is not the WHOLE of the U.S.A.

robert
robert - Tuesday November 04, 2008 01:36PM EST

An Obama win will bring us to economic disaster, personally as well as nationally. His supporters have no sense of history but have fallen for "change for the sake of change" without substance to back it up. What credentials, what actions, what experience does he have to lend any substance to his rhetoric?

Adam
Adam - Tuesday November 04, 2008 01:37PM EST

I think the stats are a little scewed since 1970 there have only been 12 years of Democrats in office vs 28 from Republicans. That works out to 1 in 4 years being down for both sides. The only truth in statistics is you can make them say pretty much whatever you want. Aside from that, typically economic policy takes years to be fully digested. So claiming growth in the economy durring one parties tenure over the other is meaninless.

Adam
Adam - Tuesday November 04, 2008 01:37PM EST

I think the stats are a little scewed since 1970 there have only been 12 years of Democrats in office vs 28 from Republicans. That works out to 1 in 4 years being down for both sides. The only truth in statistics is you can make them say pretty much whatever you want. Aside from that, typically economic policy takes years to be fully digested. So claiming growth in the economy durring one parties tenure over the other is meaninless.

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:39PM EST

A strong support for Obama will be good for the market, other than a questionable win for McCain. As a Canadian in the minority I had hoped for a McCain win but with no support for the Auto sector in their hour of need and more positive yak from Obama in this regard the Dems have cinched a win. The greediest market decade was the 90's with Clinton I hope for a repeat with the Obama camp. If the auto sector goes down, all bets are off and we can get our begging bowls out unless you have a government job. Best of Luck in Your Future

nathan
nathan - Tuesday November 04, 2008 01:39PM EST

It's about time to bounce back from the bottom! It's not because of election!

furybird23
furybird23 - Tuesday November 04, 2008 01:40PM EST

sell the winners and sell the losers

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:41PM EST

Go Obama! He rode a blazing saddle..........

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:43PM EST

Obama will win. So sell or buy based on that. Just wondering, how many republicans are selling based on that? And how many democrats are buying based on that?

Wireless
Wireless - Tuesday November 04, 2008 01:44PM EST

I'll take any help I can get at this point. May history be correct.

Yahoo! Finance User
Yahoo! Finance User - Tuesday November 04, 2008 01:45PM EST

No bottom in sight yet. Still too much bad credit out there. Just an election bounce. Sell the peaks.

BT
BT - Tuesday November 04, 2008 01:47PM EST

You can't really "peg" any economic results directly to any president. Economic challenges and government policies both take a long time to become evident in the economy. Equating good or bad times to a given president is just not a realistic method of evaluating history.

rockjock1037
rockjock1037 - Tuesday November 04, 2008 01:56PM EST

more useless stats.........Thanks!

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