by Gary Alexander
February 6, 2024
President’s Day is officially the third Monday in February, marking the midpoint between two older holidays – Lincoln’s Birthday (February 12, 1809) and Washington’s Birthday (February 23, 1732), but today also marks the birthday of another great president, Ronald Reagan, born February 6, 1911. In fact, I would argue that these were the three greatest U.S. presidents of the 18th, 19th and 20th centuries.
Reagan’s official biographer, Edmund Morris, made a hash of the Gipper’s life, admitting that he didn’t understand his affable subject, but he began his bio, “Dutch,” with a touch of the actor’s dramatic flair:
“At 4:16 am on February 6, 1911, Ronald Wilson Reagan was born feet first, after 24 hours labor. Even in the womb, it seems, he plotted his entrance with dramatic effect. He weighed 10 pounds.” – Dutch, p. 14.
Reagan was born in Tampico, Illinois, the second and final son of Jack and Nelle Reagan. If you take this fairy tale seven decades forward, on the day before his 1980 election victory, the house where Reagan was born had become the First National Bank of Tampico. It was a rainy Monday, but as the rain lifted, a rare double rainbow appeared over the address where Reagan was born. Lloyd McElhiney, manager of the local grain elevator, ran home, hoping the image would last, grabbed his camera, and caught this image:
What Presidents (Since 1974) Were Best for Stocks?
When it comes to stock market performance, it’s easy to give most (or all) of the credit to the president or the party in power. They can help or hinder the health of the economy, but in the end, corporations are still the source of stock market earnings and profits, not politicians. The reigning tax policies and regulations can either hurt business or free businesses to compete, and Congress as well as the President’s rhetoric can give those businesses a clear path, or a barrier to profit. A President cannot fight a hostile Congress.
In that regard, it’s important to recognize that the Democrats controlled the House of Representatives for 40 consecutive years, 1954-94, including all of Ronald Reagan’s years in office, and the Democrats also controlled the Senate every year from 1954 to 1980, and 62 of the 82 years from 1933 through 2014.
With that caveat in mind, here is the performance of the eight elected Presidents of the last 50 years, as calculated from the date of their Inauguration Day, divided into two-term Presidents and one-term leaders.
Best Two-Term Presidents (in Terms of Stock Market Gains) Since 1974
A quick scan of these lists shows that Democratic presidents did better in two terms, Republicans in one term, but you must factor in the role of Congress. The real story is that the stock market tends to do best when the powers are split between the presidency and Congress. When Republicans controlled everything under George W. Bush from 2001 to 2006, the market went down, then crashed in his final year; and when Democrats controlled everything under Jimmy Carter, the market went down in real (after-inflation) terms. But when the powers were split, the market became supercharged. This is best illustrated by the times when there were even divisions – or mid-term course corrections – during these four presidencies:
Example #1: During Ronald Reagan’s years, the Democrats controlled the House all eight years, and they controlled the Senate in his final two years. Although House Speaker Tip O’Neill was noted for working well with the President in negotiating compromise, neither party got all they wanted, which kept either party from gaining total power. That trend continued during George H.W. Bush’s single term:
Example #2 is the most informative: Bill Clinton’s 8-year term is the blue-ribbon winner, but it’s a tale of two party dynamics. In his first two years, the S&P gained only 8%, when the House was massively (258 to 176) Democratic, along with a Democratic Senate – a blue state monopoly. Then came the Republican Revolution of November 2, 1994, when the Republicans gained 108 seats, from an 82-seat minority party to a 26-seat majority. The Senate also turned red in 1994. Both houses stayed red for the next six years.
The difference was reflected in the stock market, the economy and balanced budgets in 1998-2001. With a split Congress, the S&P gained 205% in six years, versus 8% in two years with a one-party monopoly:
Example #3 is staring us right in the face: The Biden years. During his first two years, President Biden had the same kind of one-party monopoly that Presidents Clinton, G.W. Bush, Obama and Trump enjoyed, and it apparently went to his head – just as it did to the four fellas I just named. Biden went too far in his ambitious spending plans, as did most of those others I just named (two from each party, please note).
The market reflects the same story – no market gains during Biden’s first two years, then spectacular gains the last year and three months, since the Republicans took over a modest majority in the House:
Once again, split power in government is better for investors than one-party monopoly of either stripe.
Let this be a lesson for how to plan your investments after the results come clear next November 5, 2024.
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
The Latest Economic Data May Postpone Rate Cut Expectations
Income Mail by Bryan Perry
Hot Jobs Report Runs Counter to Soft ADP Data
Growth Mail by Gary Alexander
“President’s Month” Invites Presidential Comparisons
Global Mail by Ivan Martchev
Bonds Are Once Again More Volatile Than Stocks
Sector Spotlight by Jason Bodner
When You Can’t Find Good Answers…Create Your Own
View Full Archive
Read Past Issues Here
About The Author
Gary Alexander
SENIOR EDITOR
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
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