Democrat or Republican? Makes No Difference to Stocks

A common belief holds that the stock market will fare better when a Republican is in the White House because the Grand Old Party tends to be more pro-business. The related expectation is that Democrats—with their purported preference toward higher taxes and increased regulation— hinder economic and market growth.

However, the historical evidence doesn’t support either notion. Consider:

  • The markets have done very well, and had bouts of difficulty during the terms of presidents from both parties.
  • If you look at the returns of the Dow Jones Industrial Average since its invention in 1897, it’s clear the stock market does not favor either party.
  • Investors who stay the course are likely to fare much better than those who invest only when one of the two major political parties controls the White House.

Exhibit 1: Neither Party Can Lay a Claim to Delivering Better Market Performance

Presidents Stock Market, Presidential Election Effect on Stock Market, Democrat or Republican

Sources: Bloomberg, OppenheimerFunds. As of 12/31/14. Past performance does not guarantee future results.

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