Tuesday, September 18, 2007
A while ago I saw the results of a study on the effects of various political parties in power versus the stock market performance. The conclusion was that the stock market has historically gone higher when the Democrats are in power than when the Republicans are in power. However, the stock market has had it’s best historical performance when power is split between the parties for example a Republican President and a Democrat Congress or visa versa. The study concludes that a split government causes gridlock resulting in little new legislation, which is best for the stock market and, presumably, the economy. You may have heard the adage “When all is said and done, more will have been said then done.” A split government results in lots being said but little being done which is ideal for the economy and stock market performance.