It's no secret that Wall Street investors and bankers love the Republican Party. In 2012, they almost exclusively supported the presidential hopes of Mitt Romney, and in 2014, they gave far more to the campaign coffers of Republican candidates than to Democrats. The general thinking of Wall Streeters is that Republican policies favor them more than Democratic policies.
The reality is different though. Not only have the worst two crashes of the stock market happened under Republican presidents (Hoover in 1929 and Bush in 2007), but history shows us that the stock market has done much better under Democratic presidents than under Republican presidents (including right-wing icon Ronald Reagan). It turns out that by voting and supporting Republicans, Wall Street investors are acting against their own interests.
Here is how Democratic consultant puts it in an article he wrote for The Hill on December 16th:
I have no earthly idea why a stock market investor would vote Republican — all you have do is look at the numbers. The numbers are staggering, breathtaking and unimaginable. How anyone with even a penny in the market would vote for their interests and choose a Republican is unexplainable.
Well, let me put this in terms for those savvy stock investors: it is like having a discussion about Apple stock versus Lehman Brothers stock.
Before we begin, I would like to be clear that I am not even going to mention the president who presided over the greatest economic boom since World War II, whose brilliant strategy was a combination of tax increases on the wealthy, family and medical leave for working families, an increase in the minimum wage and adherence to Keynesian policies. While I would love to include my friend and former client Bill Clinton’s record in this piece, it really wouldn’t be fair. I don’t like watching my Louisiana State University Tigers play Sam Houston State and I don’t think you would like to read about such a staggering disparity — it would be a blowout. So, let’s focus on President Obama and former President Reagan.
Since Obama was sworn in on Jan. 20, 2009, Standard & Poor’s 500 index has gone up approximately 115 percent, the Dow Jones industrial average has experienced a growth rate of 146 percent and, perhaps most impressively, Nasdaq has grown in size by 188 percent. Two thousand days into his presidency, the major stock indexes under Obama have had average gains of 142 percent — compare that to the record under Reagan, who saw gains at 88 percent during that same time period.
Russ Britt of MarketWatch notes, “the average stock-market gain under four post-Depression Democrats through each one’s 2,000th day in office has outpaced the average gain of the four Republicans in the era by a factor of nearly 4 to 1. Democratic gains have averaged 133%, while Republican market advances have had a mean of 33%.”
I cannot see how anyone can read these numbers differently.
Political pundits will spend the next few months asking questions about presidential candidates’ qualifications and if they will be able to make tough decisions. The one thing we do know, thanks to history, is that that stock market is likely to do well if Democrats win. If the stock market is among your considerations, I will close with the findings of the two foremost experts on this topic and the larger comparisons of economies under Republican and Democratic presidents, Princeton University professors Mark W. Watson and Alan Blinder:
“The U.S. economy not only grows faster, according to real GDP and other measures, during Democratic versus Republican presidencies, it also produces more jobs, lowers the unemployment rate, generates higher corporate profits and investment, and turns in higher stock market returns. Indeed, it outperforms under almost all standard macroeconomic metrics.”
With such glaring facts and evidence, I ask stock investors to reexamine, reconsider and reinvest their confidence in the Democratic Party. Franklin Roosevelt was famously called by his fellow affluent Americans a “traitor to his class.” Well, if history was any guide, FDR wasn’t a traitor at all. He was the first in a series of Democratic presidents whose policies benefited the same wealthy people who railed against him.