Investing In America

Timing Is Everything

Wondering how to invest in this Democratic Era? Wondering if the fact that the Dow Jones Industrials dropped almost 1000 pts. in the immediate aftermath of the Obama election can be blamed on the Republicans? Or does it mean that Wall Street doesn’t like a redistributionist in the white house? Dr. Helen has done some research on the topic.

I remember reading about some study on Democrats being better for the market than Republicans a while back in the blogosphere and decided to find out if this was true. Not according to The Wall Street Journal that says divided government is best for the market:

Here, she quotes the WSJ.

When Republicans have controlled the whole government, it blows away anything Democrats can do. Stocks have averaged 17.5%and real GDP growth 3.3%.

By the way, as fond as Democrats are of saying how poorly stocks have performed under George W. Bush, here’s a sobering fact: Stocks averaged 14.1% return in those Bush years when Republicans controlled Congress — and when Democrats got in there and mucked things up, the average has been a loss of 8.9%. That’s not even including 2008 year-to-date, which doesn’t look so pretty.

If the electorate were really smart, it would elect a Democratic president and a Republican Congress. Under that deal, stocks have averaged a 20.2% total return, and real GDP averaged 4%.

Fortunately, in a free market economy such as ours, the government is constrained by law and tradition to keep its hands off the economy, generally speaking (or at least, to keep its hands as lightly as possible on the till). Unfortunately, we’re lax about enforcing that too rigorously, and don’t completely believe philosophically that this would really be a good thing.

Explore posts in the same categories: domestic, Economics, politics

One Comment on “Investing In America”

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