Despite the latest polls and up-to-the-minute spin doctoring, we don’t know who is going to win the majority of electoral votes on November 2. But do we have a clue as to how the economy and the markets will perform under a Bush or Kerry Administration? Over the short term, many observers note that just getting the election over will be good news for the financial markets, which abhor nothing so much as the vacuum of uncertainty. But the real question on the minds of most investors is simple: Which candidate would be better for my portfolio?
The knee-jerk reaction assumes that a Republican Administration, particularly if the GOP also controls both houses of Congress, is always better for the economy and the markets and, thus, for investors. A close look at the actual economic figures for the last 60 years, however, indicates that the common assumption may be wrong.
According to research by Standard & Poor’s published on the Investment Advisor Web site’s Mutual Fund Center, the S&P 500 posted an annualized increase of 10.7% in the years that Truman, Kennedy, Johnson, Carter, and Clinton moved into the White House. The annualized gains for the years immediately following the elections of Eisenhower, Nixon, Reagan, and the Bushes were only 7.6%.