Will stocks rise in '09?

The stock market historically has risen more during the first year under Democratic presidents than the first year under Republican presidents, according to data released last month by Savant Capital Management Inc. Rockford, Ill-based Savant's analysis of returns for the Standard & Poor's 500 stock index dating back to the early 1950s shows that in the first year of a president's term, the market has performed better under Democrats than Republicans. Since Republican Dwight D. Eisenhower entered the White House in 1953 and the S&P 500 dropped 0.99% for the year, only one GOP president has seen the market rise in his first year (a 31.49% return in 1989 under George H. W. Bush). Of the four Democratic presidents elected in the past half century, only Jimmy Carter saw the market tumble in 1977, when the S&P 500 fell 7.18%. Despite the Savant data, the Zero Alpha Group, an international network of nine advisory firms that includes Savant, held a conference call before last week's election to emphasize that investment decisions shouldn't be made based on the outcome of the presidential race between Sen. John McCain, R-Ariz., and President-elect Barack Obama. "Investors who have a long-term investment plan should stick to it and not speculate based on the outcome of the election," Kimberly Sterling, president of Orlando, Fla.-based Resource Consulting Group Inc. — also part of the Zero Alpha Group — said during the conference call. Her firm has more than $1 billion in assets under management. Washington-based Zero Alpha Group also cautioned that potential gains in the stock market under a new president might be offset by tax increases. During his presidential campaign, Mr. Obama proposed raising income and capital gains taxes on those who make $250,000 or more, while Mr. McCain said that he would extend President Bush's tax cuts and keep capital gains taxes at 15%.