Very Interesting…

I am aware of a number of upper-income folks who justify their continuing support of Donald Trump by asserting that–“like most Republicans”– he has been better for their portfolios. That has always struck me as a poor excuse for ignoring what another Trump Presidency would do to the country (and for that matter, the world), but I’ve chalked it up to selfishness and (misunderstood/shortsighted)  self-interest.

Evidently, I should have attributed it to ignorance, because it turns out that–when it comes to investment returns– Democratic administrations have greatly out-performed Republican ones.

As I was reading a recent issue of the Indianapolis Business Journal–a publication that covers local government far more thoroughly than the Indianapolis Star, by the way–I came across the regular column by Mickey Kim devoted to giving investment advice. This particular column was titled “Keep Calm and Don’t Mix Politics with your Portfolio,” and it was an effort to persuade people not to base their investment strategies on partisanship rather than performance, not to suggest that one party was better than the other for investment.

But the data was eye-opening, at least for me. (I readily admit to chosen ignorance about all things investment.)

My friend Sam Stovall, chief investment strategist for Wall Street research firm CFRA, dissected price changes for the S&P 500 going back to 1945 based on election results.

Republican administrations are generally viewed as “pro-business,” and conventional wisdom is that stocks do better with a Republican in the White House. There has, indeed, been a huge difference in returns during Democratic versus Republican administrations. However, as is often the case, conventional wisdom is wrong. Past performance is no guarantee of future results, but Stovall calculated from Harry Truman’s inauguration on April 12, 1945, through March 15, 2024, the average annual return for the S&P 500 was 44% higher with Democrats in the White House (9.5% vs. 6.6% during Republican administrations).

Further, according to Invesco and Haver Analytics, hypothetically speaking, the best-performing portfolio from 1900 to 2023 was the “bipartisan” one that stayed fully invested in the Dow Jones industrial average (a price-weighted index—cannot be invested in directly—of the 30 largest, most widely held stocks traded on the New York Stock Exchange) during both Democratic and Republican administrations. Again, past performance is no guarantee of future results, but starting with $10,000, this portfolio grew to almost $9.9 million.

Conversely, a “partisan” portfolio, invested only during Democratic or Republican administrations, underperformed by millions of dollars. The same $10,000 invested only during Democratic administrations grew to about $528,000. Invested only during Republican administrations, the initial $10,000 grew to a bit less than $181,000.

Kim concluded this analysis by reiterating his intended message, that “there can be a huge cost to letting a partisan political storm crash your portfolio.” His sound advice: “Develop an investment plan based on your long-term goals and stick to it. Your financial future will depend far more on how much you save and invest, not who wins the election.”

I am in no position to quibble with that advice, which strikes me as quite sound, but it certainly does raise a question about those upper-income Trump apologists. I suppose it’s possible that their portfolios grew under Trump, but given the truly excellent performance of the economy during the Biden Administration, it’s quite likely they’ve done as well or better with a Democrat in the White House. Is their purported reliance on portfolio performance an evasion intended to mask the actual reasons they support Trump (racism, misogyny, isolationism…)? Or do they actually not understand the significance of the data I’ve cited above?

Perhaps they’ve simply and unthinkingly accepted the old “country club Republican” belief that the GOP is the party looking out for the interests of the business community, while Democrats are “giving away” tax dollars via welfare and government spending. If so, someone needs to explain to them that both the short and long-term interests of the business community include such things as social stability, a well-maintained infrastructure, an educated and adequate workforce, and a population with enough disposable income to support robust consumer demand.

As investors are often admonished, past performance is no guarantee of future results. But the odds would certainly seem to be in the Democrats’ –and Biden’s–favor.


  1. Social and financial stability are underrated. If the existing gap between the wealthy and the have-nots grows, eventually, there wonʻt be enough consumers to support our consumerist economy. Middle and lower income folks will not be able to afford anything but the bare minimum, and as it is, most people are only one paycheck away from financial disaster. As George Conway says, “Vote for Joe, not the Psycho.”

  2. Professor-terrific column this morning. As I stand on the same side of the fence that you do, with little knowledge of investments, I have always believed conditions such as wars, pandemics, race issues, world wide energy issues impact, religious turmoil, etc, impact our economy, much more than the person sitting in the oval.

  3. When I was President of a small manufacturing company, almost all of the other small businessmen I knew were apposed to government health care. Looking at my profit and loss statement, the single baggiest was employee health insurance. Now I recognized that a government run health insurance program would replace that expense with a tax. But it would also replace a profit driven system with one where profit was not a motive. This could be seen in the vast difference in administrative expense between government programs like Medicare and private plans. Therefore, there was no way the replacement tax would be more than the cost of the private insurance. Plus, the staff you had to hire to manage the private plan would go away. Bottom line was that universal healthcare would put more money in your pocket. The response from my fellow businessmen was that they apposed “socialized medicine.”

  4. It’s more than what the portfolio people think about their money. There is strong confirmation bias among those who will not see these numbers. Timothy’s comments are absolutely correct, logical and proven: A healthy society is far more productive than an ailing or indebted one.

    Health insurance is a scam and a rip-off for everyone except the portfolio people. Naturally, Republican lawmakers allowed this to happen. I cover this subject in two books: “Racing to the Brink: The End Game for Race and Capitalism” and “Killing the Dream: America’s Flirtation with Third World Status”.

    I must invoke Rick Wilson again: “Everything Republicans touch dies.”

  5. Or is it fear that Democrats might actually make them pay their fair share of taxes on the wealth the have accumulated through investment. More Republicans means more tax cuts and more loopholes, especially since Reagan. Non-wage income is more sacred to the new Republican theology.

  6. Len,

    How many DEM administrations have come and gone with the tax loopholes staying on? Who do you think finances the election of DEMS? Get REAL.

  7. Ignorance, and confirmation bias wedded to conventional wisdom, will beat out empirical data anytime…especially for people who have held that sort of bias for a long time.

  8. Compared with the rest of the Western world, we are substantially undertaxed, esp. at the highest income levels. One wonders at the magical thinking (or lies?) of the current Indiana gubernatorial candidates, who propose many new and expensive efforts for rural Indiana that “big city politicians” won’t. These big promises are accompanied universally with “tax cuts” to “get the burden off the backs of” taxpayers and companies. As usual, the outcome should one of these bozos become governor will be more on tax cuts than anything else. Media attention will focus on the sizzle, not the (missing) steak. All we can do is donate D and vote D. The Dems have their own problems and limitations, but at least they appear sane and lacking the angry bigotry and cruelty of the MAGAtes.

  9. Hunter,

    Yes – the lessor of two evils. But…should that “lessor” come to rule, they need to be held accountable for the evils they allow to continue.

  10. Republicans have become servants of Donald Trump and are taught by him that everything is about who the President is instead of everything being about the Constitution.

    That’s an impending, perhaps fatal, crash.

  11. It is fascinating to see the correlation between investment portfolios and who’s in the White House. I’ve never been upper-income, so I have no clue why they vote the way they do. I have a few theories that I won’t go into now.

    It’s the same with the gray hairs supporting Republicans – why? Their goal is to end Social Security and Medicare, the very lifeblood of most elderly people. Minorities and women who support Republicans are mind-boggling.

    The other category is non-voters who are on public assistance. When I worked in the social services field, I was amazed at how many poor people either didn’t vote or their racism had them voting for Republicans only. This, too, was mind-boggling. They let their bigotry cloud their judgment and self-interest.

    I believe the same happens for those country club Republicans who wouldn’t dare admit to voting for Democrats. Their bigotry clouds their judgment and self-interest, too. 😉

  12. Other factors: tax cuts that did “wonders” for the well-off; corporate interests, not solely individual returns, are front and center and don’t enter the calculus used here (not to dim its importance, however); and, in the end, it’s politics and perceived self-interest, over principle (not to mention the preservation of the country and the critical importance of leadership in the world.) If you listened to Jaimie Dimon recently, you’ll also get the distinct feeling that another key factor is fear, fear of retaliation in one form or another if Trump prevails. In the end, it will be how these folks vote when no one is watching…

  13. As a Keynesian I think the effect of robust demand is underrated, and that labor-friendly Democratic administrations provide the economy with the wherewithal for such enhanced demand. This also explains why Republican businesses (and their stock values) go up during Democratic administrations. Everyone wins.

    The old Country Club Republicans are a dead breed with the advent of the Magas, and their remnant’s economic views resemble Democratic economic views more than the chaotic views of their fascist successors, the Magas. We Democrats have repeatedly proven that both business and labor can prosper with progressive economic policies where the wealth generated by our economy is more fairly and equitably distributed, a result which gives rise to the Keynesian robust demand that undergirds prosperity for all, all irrespective of the usual propaganda cries of socialism etc. from the chaos-makers, as the data Sheila sets forth today demonstrates.

    How many new yachts do the superrich need (while those who labor for them struggle with a disproportionate portion of the wealth they help create, inflation, corporate price gouging etc.?)

  14. There are no more “I vote for them because I am fiscally conservative” Republicans. Anyone who supports Trump now is an anti-American, dictator-supporting traitor to the United States Constitution.

    There are no exceptions.

  15. Just as we’ve seen with the Church, what people say they believe has little to do with how they vote or behave. I was raised Republican and heard all the old dogmas about small government, less regulation, the GOP being the party of business, and on and on.

    But do you know what really got Republicans’ blood pumping with fear and anger? THEM. As in “they are all waiting for a handout.” “They refuse to stay in their place.” “They just expect something for nothing.” You have all heard these things yourself. As someone on this blog posted just a few days ago, Lyndon Johnson expressed it best when he explained that the best way to pick a White man’s pocket is to tell him that he is better than the best Black man. Add Muslim, women, LBTGQ persons, trans persons to that list and you have it all. What counts for too many is to be able to claim that they are “better” than those around them. Republicans are simply more adept at telling that lie than Democrats are.

  16. Indeed, Dems have been better for a portfolio, and sticking to an investment strategy that makes sense is better than adjusting based on who is in the WH.
    There’s an interesting article about how higher interest rates may be fueling the economy – It seems that particularly retired people who have bond portfolios are seeing the benefit of normal interest rates that we haven’t seen in about 16 years.

    That said, I also think confirmation bias and disinformation will rule the day. The often repeated “Go woke and go broke” flies in the face of what really happens to MAGA supporters who fly too close to the sun such as Giuliani, Lindell, Alex Jones, disbarred attorneys, DJT media investors, FOX News, Musk (Twitter) and now TSLA stockholders – if not “Broke Don” himself.

    Dems need permanently change the narrative about who is the party of responsible governing.

  17. To me, those are the absolute worst people because they’re basically willing to sell their morals. They think Trump says and does distasteful things but they’re willing to overlook that for a price. At least the bigot or the zealot sticks to their (misguided) beliefs and is upfront about them.

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