Stocks Love Gridlock (But Only One Kind)

This is already the best year for the Dow since 1998. At the WSJ, E.S. Browning finds some interesting facts:

Since 1900, the Dow has averaged a 7.8% annual gain under Democratic presidents, compared with a 3% annual gain under Republicans. With a Democratic president and a Republican Congress, the Dow has gained an average 9.6% a year.

The worst mix has been a Republican president and a split or Democratic Congress, which on average has produced little or no gains.

Bespoke Investment Group, in Harrison, N.Y., has uncovered another fact: Only four presidents elected since 1900 have seen the Dow rise 50% or more during their first three years. One is the current president. For the other three—Franklin Roosevelt, Dwight Eisenhower and Bill Clinton—the Dow’s average gain during the fourth year in office was 19.7%. All three were re-elected.

According to InTrade, it’s quite possible that we’ll see President Obama re-elected and Republicans gain control of both houses of Congress.

Posted by on March 5th, 2012 at 9:56 am

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