S&P Strategist: Democratic Administrations are better for the market

[TWiley]

I retyped this verbatim from a Fidelity Investments Quarterly Magazine.

Sector Dynamics
Why the Democrats' victory may be a win for investors.

Historically, the S&P 500 Index has posted larger returns during periods in which the executive and legislative branches have been from the same party. Since 1945, there have been 26 years of pure political harmony, 20 of which featured a Democratic President and Congress. In each of these 26 years, the S&P 500 rose and average of 10.4% (excluding dividends) and posted an annual advance 77% of the time. This strong showing may be due to swift approvals of proposed spending programs, which stimulated the economy, increased earnings and propelled stock prices

The conventional wisdom is that wall street tends to embrace fiscally conservative politicians who champion laissez faire policies. Traditionally that has meant rooting for a Republican. It is therefore quite interesting that the market has not traditionally performed as well under Republicans as Democrats.

Since 1945, the S&P 500 gained an average of 10.7% in each of the 28 years that a Democrat occupied the White House, while the 500 gained only 6.4% annually in the 36 years that a Republican was in office.

No sectors consistently outperformed the market during Democratic administrations. Current economic issues tend to take center stage. Therefore, S&P continues to recommend overweighting the defensive Consumer Staples (such as food, beverage, and tobacco stocks) and Health Care sectors as the length depth, and reach of the global recession remains uncertain.

Sam Stovall, Chief Investment Strategist, Standard and Poor’s

[Andy823]

1. Yep,

Those who think things are bad now should think about how bad it would be if McCain had won! Trillions more in tax cuts for the rich and to hell with the rest of the country!

[PM Martin]

2. He would pass on in a year and Sarah Palin

would bring the "end times" as her kind believe in. :scared:

[Andy823]

4. Yes, and then

It all becomes a "NIGHTMARE!

[TWiley]

6. Pretty frightening isn't it?

That people actually listen to and believe in folks like Sara Palin. They will easily dismiss the opinion of a "senior strategist" of the S&P 500 because math and science are involved, and of course, the S&P 500 does not appear in the bible.

[TWiley]

3. Tax cuts typically don't work either

You cannot cut enough tax without destroying government services.

About 1/3 of Mr. Obama's stimulus was devoted to tax cuts, most of which was to soothe Republicans. The fact is that $13 dollars a week (average) increase in every workers wage will have little or no stimulus effect. It is a tremendous waste of money.

Now, multiply the number of workers times $13 per week and spend it as a lump. Invest in a smart power grid to transfer electricity from the desert (solar) or the plains (wind) to metropolitan areas.

Or, how about another TVA type investment? Or, use that money to beat back a few mortgage defaults.

The simple fact is this. If you have $1000 and must spend it. It is extraordinarily foolish to spend it a few bucks a week. That is called "squandering" or "blowing" a nest egg.

If it must be spent, it is more powerful as a lump sum because large sums are more difficult to come by.

[Andy823]

5. I agree.

I would have liked more jobs instead of the tax cuts.