Why does the Stock Market take a Dump during Republican Administrations?

[DrDeth]

*Originally posted by Sam Stone *
**My point about lag between an election and any possible influence of Republican or Democrat policies is also valid. If the economy was bad in 2002, how can any reasonable person claim that that was George Bush’s fault? Sure, he was president, but none of his policies had been enacted.
All in all, studies like this are pretty meaningless. **

Except if- and this was my hypothesis- the market is not reacting so much to what the actual policies are as to what they will expect them to be. It seems that investors- whether justified by economic policies or no- seem to be afraid of GOP Presidents & feel safer with Dems.

Of course- it could possibly be the old “self-fulfilling prophecy”. Investors are afraid the market will go down during a GOP admin (for whatever reason, rational or no), thus they sell- which forces the market down. Contra-iwise during a Dem admin. So even of they are wrong wrong wrong and the GOP actually has better economic policies, the market still declines. Note that this would not seem to be able to have a long term effect, though.

However, since the market is so cycylical, this does not seem to be a good explanation during a long admin.

John Mace. Yes, you have a point. Correlations can also be made to skirt length. BUT- the President can & does have a very real effect on the economy, whereas you’d have to show me what direct effect skirt lengths or Superbowl wins have on the economy.

But- if you haven’t read the study, don’t go throwing rocks, as it is a pretty well done study.

[John_Mace]

DrDeth wrote:
BUT- the President can & does have a very real effect on the economy

An unproven assumption. The skirt length might be an apt analogy. Perhaps the correlation for both President and skirt length to the stock market works the other way around.

And we do know that under at least one Dem President, skirts were flying high indeed.

[pantom]

People, you can get the data since 1871 from globalfindata.com, along with inflation as well. Yours truly’s been doing this for a while for fun, if not for profit.
Assuming you’re willing to take my inflation adjustment as being accurate, and that the data at this site is accurate, two largish assumptions, the results in terms of years are as follows, since 1871:

Republicans: 75 years in power, 53 of them featuring up years in the stock market, for a hit rate of 70.67%.
Democrats: 56 years in power (that was a surprise), 36 of them up years in the stock market, for a hit rate of 64.3%.

So over the longer term, the Republicans have the edge.
If you want me to figure out the actual returns over these years, you’re gonna have to pay me.