The Investment Scientist

Democratic control and stock market performance

Posted on: November 5, 2008

After the election of Barak Obama as our next president last night, I did an exercise to find out the historical stock market performance under a Democratic vs. Republican administration since 1900.

My examination showed that the view that a  Democratic president is bad for the market is unfounded. In three important measurements: S&P 500 return, dividend growth and earning growth, stocks have done better under a Democrat administration.

However, the notion that a Democrat is bad for inflation does ring truth, as evident by the 4.8% inflation rate under a Democratic White House compared to the 2% under a Republican one.

S&P 500 return Dividend growth Earning growth Inflation
Democrat 8.1% 5.6% 10.6% 4.8%
Republican 6% 5% 5.7% 2%

Data source: Yale University Professor Robert Shiller’s database

My next exercise is to find out how the market performed during periods of Democratic control of both the White House and Congress. Sign up for my newsletter to get this information.


Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC.


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