Zeev's Turnips Patch-No Politics (ZEEV)

[Alex G]

Wall Street wants Bush, but is the Street right?

The conventional wisdom is that the stock market does better with Republican presidents than with presidents from the Democratic Party. Indeed, CNBC’s Melissa Lee said yesterday that 92% of money managers the network polled thought the markets would do better with George W. Bush as president.

The conventional wisdom might well be wrong.

Researchers at the Wharton School of Finance at the University of Pennsylvania say stocks do nicely indeed when the GOP wins an election. But the biggest advances come after a Democrat wins.

In the last century, the Dow Jones industrials rose 97%, on average, during Democratic administrations. Republicans saw the Dow rise a bit under 50%, on average. If the stock market anticipates a Republican victory in the final months before an election, the S&P will go up about 3.7%, the researchers said.

Control of Congress is not accounted for in the studies. And there’s one last point to make: Gains made on the back of politics do not last. Nothing affects stocks more than good-old-fashioned earnings and interest rates.

-- Charley Blaine and Kim Khan

http://moneycentral.msn.com/content/CNBCTV/Articles/Dispatches/P88477.asp