The election of 2008 is over and we thought it might be interesting to look at history for some clues about how the stock market may perform under a Democratic President and a Democratic Congress. This is not a political statement – just a look at history for some perspective.

Conventional wisdom says that the stock market performs best when the Republican are in control however, the historical record contradicts this widely held perception. The data shown below was prepared by Ned Davis Research, a widely respected research firm that collects statistical information on a wide variety of factors that affect the economy and stock market.

Stock Returns by Party of President and Majority Party in Congress
March 4, 1901 – October 31, 2008
(Price Only – Does Not Include Dividends)

Source: Ned Davis Research

Historically the stock market has performed best with a Democratic President and a Republican Congress. Regardless of which party controls the branches of government, one should consider the circumstances of the time. For instance, the Republicans are handicapped by the Hoover Administration during which stock prices lost more than half of their value. The Democrats benefited during the Truman Administration from the pent up demand at the end of World War II.

The Democrats also benefited from the mania in technology stocks that occurred during Clinton’s second term and George W. Bush, a Republican, was on duty as the tech bubble burst. Stock market performance is dependent on many factors of which the party in control of Congress or the White House is only one. While past performance is not guarantee of future results, we hope you found this historical perspective interesting.

Foothills Asset Management, Ltd.
Sound Advice … Your Best InvestmentTM

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