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Dems and GOPAs I stated last week, the historical evidence indicates that the stock market performs better when a Democrat is sitting in the White House.  The responses have been predictable along party lines with the usual rebuttals about the current and just recently passed administrations.  Given that I studied data from 1893 to present, I will just merely state that they have a sampling problem, and just move on.

However, I was asked by several people to look at the effect controlling parties in Congress have on the stock market, and the differences are even more significant.  By all appearances, the stock market performs better when the Republicans are in control of Congress.  It’s a pretty simple process that looks at inflation adjusted returns based on who is control of Congress. Reinvested dividends are taken into consideration also.  All data comes from Robert Shiller’s database.

What is quite apparent is that the stock market performs almost four points better, on a inflation adjusted basis, when the the GOP is in control of the House.  So what we have here so far, is that stock market performs better when we have a Democrat as President (7.2% v. 5.6%) and a Congress controlled by the GOP (8.8% v. 4.7%).  The chart below shows how the parties do based on which branch of the government they control.  More on this later.

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