Which Party Does the Market Perform Best Under?

Ask not what the GOP will do for you: Historically, markets do better under Democrats.

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If the implication is that party philosophy accounts for the Democratic advantage, it's worth noting that party comparisons over such a long period are a bit of a stretch. Markets were pretty weak under Republican Theodore Roosevelt, but in today's ideological terms he's better understood as a Democrat than a Republican. He railed against powerful financial interests ("trusts," as they were called) while promoting food-and-drug regulation and labor rights. If you're trying to link traditional Republican ideology to weak market conditions, TR is not your man. 

[Read: How the Election May Influence the Investment Advice You Get.]

Conversely, the Dow's two biggest one-year rallies might be only partially attributable to Democratic policies. The first, in 1915, came after the market had been closed or trading severely curtailed for nine months amid the start of war in Europe, and it could reflect a flight of European capital into the safety of U.S. markets, suggests CATO's Calabria. The second, during 1933, surely owes something to confidence rekindled by the incoming Roosevelt administration, but could partly have been a particularly large dead-cat bounce, given that the markets were down by more than 90 percent at their Depression-era low point.

"If you held me to a pattern, the pattern I see is that when you have a new president that promised big departures in policy from the previous one, you get a positive market reaction," says Brian Gendreau, market strategist for Cetera Financial and a professor of finance at the University of Florida. Examples, he says: FDR, Reagan, and Obama.

The fact that the Democrats haven't been waving the numbers around may be one indication that there's more correlation than causation at play here. On the other hand, it could just be prudent gamesmanship, as Calabria notes: "You complain about inequality, then you're going to try to take credit for things that increase inequality?"