Taking Stock of the Parties

By Richard W. Rahn
CATO INSTITUTE

Does the value of your stock market holdings depend on which party controls Congress? There is overwhelming evidence it does.

Over the last quarter of a century when the Republicans controlled both houses of Congress, the stock market rose by an average of about 20 percent per year. When the Democrats controlled both houses of Congress, the stock market only rose at an average annual rate of 6.9 percent for the Dow Jones and a tepid 5.1 percent for the Standard and Poor 500.

When one party controlled one house and the other party controlled the other house of Congress, the growth in the stock market was significantly less than when the Republicans controlled both houses (15.6 percent for the Dow Jones and 12.7 percent for the S&P), but significantly more than when the Democrats controlled both houses. [Continue reading.]