These statistics are fun thoughts to chew on, but completely anecdotal. Sound investment decisions should not be made based on just past trends but who knew our ballots affected our wallets in more ways than one.
Market Returns from 1940-2008 by Political Party Control (Senate/House/President)
- 15.3% – R / R / D
- 10.5% – R / D /R
- 6.6% – D / D / R
- 5.0% – D / D/ D
- 3.3% – R / R / R
The best market returns have come from periods of political gridlock. The weakest market returns occur when one party has full control.
Market Returns from 1940-2008 by Year of Presidential Term
- First Year: 4.4%
- Second Year: 2.8%
- Third Year: 16.6%
- Fourth Year: 8.4%
History suggests that the third year of a Presidential term is best for stock market performance, possibility because any legislative changes the President wants are by now widely know as are the likelihood for their success.
This information actually tells us more about how the stock market views politics than it tells us about how politics affect the market. So be sure to vote in November but don’t go putting all your eggs in any one basket.
(comments provided by Oak Wealth Advisors in their October 2010 newsletter, data source derived from Fact Set and JP Morgan Asset Management)