Stocktake: Do stocks do better under the Democrats?

Does history offer any clues to which US political party is better for stocks?

Do stocks do better under the Democrats? Photograph: Getty

Do stocks do better under the Democrats? Photograph: Getty

 

Does history offer any clues as to which US party is better for stocks?

Well, stocks have done much better over the last century during Democrat administrations, although Vanguard research indicates returns are almost identical if one’s analysis starts in 1853.

Besides, luck and timing are crucial. “An administration can enact policies that are great for the market, but have the benefits of those policies occur during the term of its successor”, says Validea Capital’s Jack Forehand.

Research also confirms returns tend to be strongest when stocks are cheap. Right now, stocks look expensive, indicating long-term returns are likely to be subdued – irrespective of who is in power.

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