While there is a perception among many investors that electing a Republican president will translate into greater stock market returns, history shows the opposite to be true, according to data released yesterday by Savant Capital Management.
Rockford, Ill-based Savant’s analysis of returns for the Standard & Poor’s 500 stock index dating back to the early 1950s show that in the first year of a new president’s term, the market has performed better under Democratic presidents than Republicans.
Since Republican Dwight D. Eisenhower entered the White House in 1953 and the S&P 500 dropped 0.99% for the year, only one GOP president has seen the market rise in his first year (a 31.49% return in 1989 under George H. W. Bush).
Of the four Democratic presidents elected in the last half century, the only one to see the market tumble in his first year as commander in chief was Jimmy Carter in 1977, when the S&P 500 fell 7.18%.
Despite the Savant data, the Zero Alpha Group, an international network of nine advisory firms that includes Savant, held a conference call yesterday to emphasize that investment decisions should not be made based on whether Sen. Barack Obama, D-Ill, or Sen. John McCain, R-Ariz., wins Tuesday’s presidential election.
“Investors who have a long-term investment plan should stick to it and not speculate based on the outcome of the election,” Kimberly Sterling, president of Orlando, Fla.-based Resource Consulting Group Inc. — also part of the Zero Alpha Group — said during the conference call. Her firm has more than $1 billion in assets under management.
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