Why has the stock market performed better under Democratic Administrations than Republican ones?
The short answer is that nobody really knows, but I do have a theory…. I believe that investors systematically underestimate what a Democrat will do to benefit the economy — simply put, they believe Democrats will try to soak the rich and try to damage the market. When it turns out that Democrats do things that are helpful for the economy and market, [investors are] surprised. So an incoming Democrat often leads to sell-offs, but when the policies turn out to do more good than harm, people get back into stocks. I have to say, though, that I’m skeptical that either candidate can be pigeonholed due to party. I tend to look at candidates and their track records more than the party. Q: What do you think of the each of the candidate’s campaigns so far? Seems like Bush can’t stop talking about terrorism, and Kerry talks a lot about Iraq. A:I have to say that the candidates are both trying to do their best — they both clearly care about the future of this country, and they’re both trying
