Unlike most studies, which are based on total returns, Santa-Clara and Valkanov based their efforts on the average excess return of the indexes over the return of the three-month Treasury bill. The results were striking. When a Republican president held office, the value-weighted return delivered nearly a 2% premium over the T-bill. When a Democrat held office, the premium was nearly 11%. While the 9% difference clearly favors the Democrats, the results from the equal-weighted portfolio were even more telling, with a 16%+ result in favor of the Democrats. (To learn more about T-bills and other government securities, read 20 Investments You Should Know: Treasuries.)
Democratic Administrations Value Weighted 1.69% 10.69%
Figure 1: Excess returns of CRSP indexes versus three-month Treasury bill, 1927-1998
Further investigation reveals the results were generated by higher real returns and lower interest rates under Democratic administrations. Business cycle fluctuations showed no correlation to the results, demonstrating statistically significant outperformance for the Democrats regardless of underlying economic conditions. Value-weighted portfolios posted a steady 10% premium in favor of the Democrats, while equal-weighted portfolios came in at around 20%. (Read more about recognizing business cycles in Understanding Cycles – The Key To Market Timing.)
Read more: http://www.investopedia.com/articles/financial-theory/08/political-party-democrat-republican-stock-returns.asp#ixzz24T70uam3r
If America lurches right, whether out of disappointment with the Obama economy or with Obama himself, there will be weeping and gnashing of teeth among the 99 percent, and social stresses will be pushed even further. If the response is totalitarian, America will become the land of the most definitely un-free. And the blowback will intensify. These social dynamics are pretty well understood.
If the ruling class would adopt the position that, “From those to whom much has been given, much shall be expected,” an incrementalist solution might be possible. But as Strauss and Howe maintain, the Crisis turning is all about revolution (one hopes a non-violent one), not about incremental progress. This is Obama’s great failing: that he was presented with an historical moment that would have welcomed revolutionary change, and he elected (or perhaps was constrained to) support the status quo in every regard but trying to get a Republican-inspired health plan passed.
Plus les choses restent les mêmes, plus ils vont changer, to coin a phrase.