Democratic Presidents and Unified House / Senate deliver best stock market returns

After living through the disatrous Bush era and remembering the Clinton era vividly (I spent most of it with Altamira), I was wondering if this outperformance of Democratic Presidents existed in history. The research predates the current collapse and the trend not only exists, but persists.


From The Democratic Dividend by Slate's Carol Vivant:

But Democrats, it turns out, are much better for the stock market than Republicans. Slate ran the numbers and found that since 1900, Democratic presidents have produced a 12.3 percent annual total return on the S&P 500, but Republicans only an 8 percent return. In 2000, the Stock Trader's Almanac, which slices and dices Wall Street performance figures like baseball stats, came up with nearly the same numbers (13.4 percent versus 8.1 percent) by measuring Dow price appreciation. (Most of the 20th century's bear markets, incidentally, have been Republican bear markets: the Crash of '29, the early '70s oil shock, the '87 correction, and the current stall occurred under GOP presidents.)

Nor does having a Republican Congress help the market. A Democratic Senate showed returns of 10.5 percent (versus 9.4 percent for a GOP upper chamber), and a Democratic House returned 10.9 percent versus 8.1 percent for the Republicans.

When both houses of Congress opposed the president, the return was a stellar 12.9 percent. Libertarians may celebrate this as proof that the market likes gridlock and government inaction. But the market likes steamrollers nearly as much: The S&P performs almost as well—returning 11.8 percent—when the presidency and both houses are held by the same party. The only situation Mr. Market dislikes is what we have now: one house for each party. Those years have a -0.9 percent return.

Republicans are no doubt muttering that that's just the stock market, not the whole economy. But real GDP growth follows the same pattern. Since 1930 (the first year decent data is available), GDP growth was 5.4 percent for Democratic presidents and 1.6 percent for Republicans.


Considering that the Dow is lower than it was when Bush took office, and now testing the 2004 lows, one can make an extremely strong case for an equity bull market during the first term of President Obama. What's left in 2008 is the November month-end rally, some but not a lot (who has profits to offset??) of tax loss selling the first third of December, followed by year end and early January portfolio rebablancing rallies.

Then it's inauguration time and after that we'll see if investors begin to once again have faith in stocks and America. My guess is that they will.

Joe Trainor, Editor / Publisher
GreenStocksInvesting.info



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Seven Stocks to Watch now and in 2009; Obama Rally Investments

Here area some American companies to consider investing in to benefit from Barack Obama becoming the President of the United States; a group of high quality companies that should also fare well through all types of administrations, for many years to come.

Seven stocks to consider, in alphabetical order:

Apple Inc

At 97.07, the stock is down over 50% from its high above $202, and when you consider the enduring appeal of its products, long-term investors may want to look at this one, or at least mutual funds that hold high quality companies like these.


First Solar

Designer and manufacturer of solar modules using a thin film semiconductor technology, based on a thin layer of cadmium telluride semiconductor material being used to convert sunlight into electricity. Significant price advantage has led to massive order book and first-mover status in thin-film solar industry. At 163.19 the stock is down almost half, but the PE is still 59. For the very brave, highest risk investors only.


GE

A blue chip among blue chips, has the advantage of being a major player in growing industries such as wind energy, solar power, water purification and many more. Friday's close (03OCT08) of 21.57 and a P/E of 10 offer an enticing entry point. The yield of 5.75% is one more reason to reach for this qualty, diversified investment in American economic renewal.


Google

As the world online more closely resembles its offline predecessor, Google gets an expanded client list and is the biggest boat to float on an expanding digital economic ocean. At 386.91, the stock is about half of its high.



Home Depot

I can't envision a revival in America without busy Home Depot stores, as a lot of housing stock gets renovated and retrofitted for the green era. The company sells building materials, home improvement, lawn and garden products, to do-it-yourself, do-it-for-me, and professional customers. At 23.81 the stock trades at 12.4 times earnings, s down from a high of 34,55 and yields 3.78%.


MicroSoft Corp

Develops, manufactures, licenses and supports a range of software products for computing devices. The Company's software products include operating systems for servers, personal computers and intelligent devices, plus Xbox 360 video game console and games. At 26.32, it trades at just 14.1 times earnings.


Ormat Technologies

Develops, builds, owns and operates geothermal and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world, and sells the electricity generated by these plants. At 31.40, the shares are down considerably from the exuberant high of 57.93.