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Thread: Why does the stock market do better under a Democratic Prez?

  1. #1
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    Why does the stock market do better under a Democratic Prez?

    Recent article: http://money.cnn.com/2004/01/21/mark...ion_demsvreps/

    Looking at the 72-year period between 1927 and 1999, the study shows that a broad stock index, similar to the S&P 500, returned approximately 11 percent more a year on average under a Democratic president versus safer, three-month Treasurys. By comparison, the index only returned 2 percent more a year versus the T-bills when Republicans were in office.
    Older link: http://slate.msn.com/?id=2071929

    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.
    ...
    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.
    So, for a strong economy, vote Democrat. Simple as that.

  2. #2
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    Calpundit has a long article on this topic today:

    http://www.calpundit.com/archives/003130.html

    His overall point is that the longterm engine for economic growth in the US is a prosperous middle class with good jobs and that Democrats tend to do a far better job than Republicans of focusing on building an economy that will produce good middle class jobs. Despite the Demos other problems with taxes and spending I do feel that he has a point: a prosperous and happy middle class is what has made America the economic giant it is, over the long haul. Sure a strictly market based winner/loser system might be more efficient on paper for a period of time but its a very unstable society (Argentina anyone?).

    Anyway, I tend to feel that's the difference in large scale economic performance between the parties.

    Of course, going TOO far to Democratic policies as in California can be quite bad: the Demos don't have a monopoly on good ideas and anything can be taken too far. Also, middle class job growth is only part of the Demo agenda and is what they tout when seeking crossover votes in a general election. When the Demos get full control as they did in CA they tend to forget the focus on good jobs and go whole hog for spending and regulating.

    Bottom line: I think Demos do a better job on the economy overall but only when the Republicans have enough presence to keep them honest.

    I am curious as to how the large scale economic statistics would play out if you analysed them by divided rule vs single party rule: I suspect the divided rule would have better economic outcomes. I could be wrong though..

    Dan

  3. #3
    New Romantic
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    correlation != causation

    - Alan

  4. #4
    World's End Supernova
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    As amusing as the correlation is, I don't think there's much to it. There's a reasonable theory that Democrats get elected in recessions, and Republicans elected in boom times - for obvious reasons - and then the Democrats gain the benefit of the runup from the recession, and the Republicans the penalty of everything going into the toilet as the boom crashes.

    Mostly, though, the sample size is way, way too small, and the Great Depression is an absolutely enormous statistical outlier that takes up, what, 10% of the data set?

  5. #5
    Neo Acoustic
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    Holy cow, another misleading post by Xpav! Film at 11!

    Oh and wow, look the Stock Market is up like 20% since Jan 2002.

  6. #6
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    Misleading? Shit Bob, the statistics show that the market do better under Democrats! Argue all you want about why, but according to the two cited articles, GDP and the S&P 500 go up more under Democrats.

  7. #7
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    Oh and wow, look the Stock Market is up like 20% since Jan 2002
    How far is it down from Jan 2001 when Bush first took office?

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