Member-only story
Does The Party Of The President Affect The Performance Of The Stock Market?
What the data says
It is election season, which means that there are hyperbolic and downright false claims being bandied about by people all over the internet. One of the most popular things to say about the “other guy” is that their election will ruin the economy. The stock market will crash. You will lose your savings and your retirement. How many times have you seen these claims? People from both sides of the aisle like to say that the other party is going to wreck the economy. But is that true? Does the political affiliation of the sitting president have any meaningful effect on the stock market? The good news about asking such questions is that the data is easily and readily available.
For the purpose of this analysis, we will be using the S&P 500. The S&P 500 is often used as an economic barometer because it encompasses stocks from 500 different companies that cut a broad swath across the economy. By comparison, other indexes like the Dow Jones and the NASDAQ have more specific stocks targeting heavy industry and technology, respectively. (I.e., the NASDAQ can do well while the Dow Jones does poorly due to differing economic factors.)
Data for the S&P 500 is available from the Dwight D. Eisenhower administration onward. The 1950s are a good place to…
