Although Republicans promote themselves as the friendlier party to Wall Street, stock investors do better when Democrats occupy the White House.
In fact, from a dollars-and-cents standpoint, it isn't even close.
The BGOV Barometer from Bloomberg Government shows that over the five decades since John F. Kennedy was inaugurated, $1,000 invested in a hypothetical fund tracking the S&P 500 only when Democrats were in the White House would have been worth $10,920 at the close of trading last Tuesday.
That is more than nine times the dollar return an investor would have realized from following a similar strategy during Republican administrations. A $1,000 stake invested in a fund that followed the S&P 500 under Republican presidents, starting with Richard M. Nixon, would have grown to $2,087 on the day that George W. Bush left office.
“The market does tend to do better under Democrats than under Republicans,” said Sam Stovall, chief investment strategist at Standard & Poor's Equity Research.
“Is it because Republicans mishandled the economy or inherited a weak economy? I'll leave that to others,” Mr. Stovall said.
Some of the difference may stem from the fact that every Republican president since at least the end of World War II has faced a recession during his first term in office, he said.
Nine of 11 recessions that began since 1945 — and seven of eight since Mr. Kennedy ran for president in 1960 — started with Republicans in the Oval Office.
WALL STREET REPUBLICANS
Democratic administrations also have been more likely to spend money on government programs that stimulate the economy, Mr. Stovall said.
“I dare say that most people on Wall Street are Republicans,” he said. “But it appears the bread is buttered on the Democratic side.”
The S&P 500 is up about 8.3% so far in 2012, the biggest year-to-date gain at this point since 1991.
Since Mr. Kennedy took office, the Democratic S&P fund would have logged a 992% gain, versus 109% growth for the opposition party, even though Democrats occupied the White House for 23 years over the period, compared with 28 years of Republican presidential leadership.
The annualized return for 23 years of Democratic administrations would have been 11%, or four times the 2.7% annualized return during 28 years of Republican presidencies.
Investing $1,000 in funds mirroring the Dow Jones Industrial Average under the same conditions, Democratic investors would have had $7,550, versus $2,716 under Republicans.
The Democratic edge is so large that the party comes out ahead even without counting Bill Clinton (the Democrat with the biggest S&P 500 gain) and George W. Bush (the Republican with the worst market record). A hypothetical $1,000 investment under Democrats excluding Mr. Clinton would have been worth $3,539, versus $3,296 invested under Republicans except Mr. Bush.
Adding Dwight D. Eisenhower to the GOP column doesn't overcome the Democratic advantage, either: $1,000 invested in the S&P 500 in January 1953 would have been worth $4,796 after 36 years under Republican chief executives, still less than half the $10,920 nest egg accumulated in 23 years under Democrats.
