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"For at least 72 years, the stock market did far better under Democratic presidents than under Republicans. How can it be that investors have failed to take advantage of this seemingly predictable pattern?"

This from a fascinating article in the NY Times on 11/20/03, which talks about a recent article in the October issue of the Journal of Finance outlining a study conducted by two finance professors at UCLA.

In particular, "between 1927 & 1998, the stock market returned about 11 percent more a year - when comparing the difference between a broad index of stock prices (similar to the Standard & Poor's 500-stock index) and the three-month Treasury bill rate - under Democratic presidents and 2 percent more under Republicans - a striking difference."

The article tries to figure out why, but alas, the study comes up short, leaving room for further research. Of course, there is always the chance that "if you torture the data hard enough, it will confess to anything," as econometricians like to say.

Nonetheless, the authors of the paper, Pedro Santa-Clara & Rossen Valkanov, can only claim what the numbers clearly state: "Stock market excess returns have definitely been higher under Democrats than under Republicans."

Something to consider when you cast your vote next November...

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