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01/10/10
What makes a market thrive?
Filed under: General, Finance
Posted by: Lillian Wong @ 7:54 pm

Ever wonder if the stock market performs better with a Republican or a Democrat in the White House?

 

Don Luskin makes the case that the economy and stock market prosper with a divided government.

“If the electorate were really smart, it would elect a Democratic president and a Republican Congress,” he says.  “Under that deal, stocks have averaged a 20.2 percent total rturn, and real GDP averaged 4 percent. That tells us that economic and stock-market success isn’t really about partisan politics at all.”

But analysis of this type omits time lags.  When a president takes oath in January 20, his policies can’t have an immediate impact on the economy and the stock market. The same holds true for a new Congress.  New policies don’t impact things for six to 12 months after an election.

–Investors Guide



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