Stock Trader's Almanac 2013 by Jeffrey A. Hirsch & Yale Hirsch

Author:Jeffrey A. Hirsch & Yale Hirsch
Language: eng
Format: epub
ISBN: 9781118239445
Publisher: Wiley
Published: 2012-07-28T16:00:00+00:00

Six possible political alignments exist in Washington: Republican president with a Republican Congress, Democratic Congress, or split Congress; and a Democratic president with a Democratic Congress, Republican Congress, or split Congress. Data presented in the chart below begins in 1949 with the first full presidential term following WWII. Lopsided market moves during the first half of the 20th century prior to latter-day improvements to financial systems, including the Depression, have been omitted to focus on the modern era.

First looking at just the historical performance of the Dow under Democratic and Republican presidents we see a pattern that is contrary to popular belief. Under a Democrat, the Dow has performed better than under a Republican. The Dow has historically returned 10.0% under Democrats compared to 6.8% under a Republican executive. Congressional results are the opposite and much more dramatic. Republican Congresses since 1949 have yielded an average 16.8% gain in the Dow compared to a 6.1% return when Democrats have controlled the Hill.

With total Republican control of Washington, the Dow has been up on average 14.1%. Democrats in power of the two branches have produced an average Dow gain of 7.4%. When power is split, with a Republican president and a Democratic Congress or a split Congress, the Dow has not done very well, averaging only a 5.4% gain. The best scenario for all investors has been a Democrat in the White House and Republican control of Congress, with average gains of 19.5%. A Democratic president and a split Congress has occurred just once, 2011–2012.

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