Voter’s Investment Performance as an Election Poll
Since the beginning of our nation’s history, many politicians have been successful investors. In fact, many congressional and presidential campaigns have been financed by the wealth of the candidates, family members, and devout backers.
Do the fickle winds of economics really influence elections in America?
We are in the midst of another presidential election campaign, and the rhetoric is running hot on which candidate’s policies are best for the economy.
Maybe, historical investment performance can offer some insight of who to believe.
In my 2019 book, “Investment Atlas II – Using History as a Financial Tool”, I evaluated all U.S. presidential administrations since 1850 in terms of how stocks, bonds and housing did during their terms.
You might not be surprised to know that Reagan’s two terms in the roaring 1980s showed a 138% increase in stocks, a 72% increase in home values and 162% increase in corporate bonds as inflation subsided and interest rates declined. Surprisingly, the best one term was that of the obscure Rutherford B. Hayes (1877) when investments increased an amazing 369% in just four years!
Not all investment bull markets are generated on the capitalistic Republican side. The best return for a Democrat was Clinton’s post-Cold War tenure of 263%, the second best ever.
Clearly, the well-followed scandals of the Reagan and Clinton administrations didn’t matter to investors.
On the flip side, both parties have had economic catastrophes on their watch. The Republican Hoover and Democrat Pierce posted disastrous investment losses, but no president had the highs and lows of Franklin Roosevelt (who’s face is on today’s dime). His four administrations made the list for best & worst single terms.
So, how have the 21st century presidents matched up to their predecessors?
Answer: above average to poor!
As the above chart shows, the total investment performance of the thirty-one presidential administrations since 1900 has ranged from 259% to (118%).
Since 2000, there have been three Republican and three Democratic administrations. Obama’s first term and Trump tenure are a virtual tie and ranked 13th & 14th. The worst was G.W. Bush’s second term with a ranking of 28th.
As of 2023, the Biden Administration currently ranks 27th with stocks advancing 33%, corporate bonds (11%) and housing modestly advancing 17% during this post COVID inflationary period.
A good guide but not a predictor!
Investment scoring is good for evaluating a presidential administration’s economic policies but not perfect in predicting whether an incumbent president will be re-elected.
For example, G.H.W. Bush was ranked 10th overall and lost re-election. In contrast, Franklin Roosevelt was able to win a 3rd term (1940) after a disastrous second term ranking 30th!
Money Matters to Voters!
I have been a money manager since the early 1990’s and can clearly say that all investors (regardless of their political views) want to see their stocks, bonds and real estate appreciate within a healthy economic environment and reasonable tax structure.
Economics will be a key point during this election, and I do think investors big and small will carefully evaluate claims made by both parties in light of concerns in their own investments, pensions and entitlements now and in the future.