Democratic Administrations was 10.4 percent. Clearly with an average annual gain three percentage points below that of the opposing party, this data does not support the critical Republican assumption of increased investment in the trickle down theory. In fact, this is strong evidence that this theory has simply failed to produce the desired effect.However, before my Democratic friends start to celebrate the superiority of their own policies, I need to put a damper on the party. Although I would certainly prefer a 10.4 percent gain in my stock portfolio to a 7.4 percent gain, the stock market varies (goes up and down) so much that a difference this big is likely to have happened by chance (p=.464). So although it is tempting to proclaim a spoiler's victory, I am ethically obliged to declare this comparison "too close to call."
The data, however, did yield some interesting information beyond the averages. When I looked at individual presidents I found that the biggest winners were Truman (16.5 percent) and Clinton (14.2 percent) for the Democrats and Reagan (11.1 percent) and Bush Sr. (11 percent) for the Republicans. The lowest performing Democrats were Carter with (4.4 percent) and Johnson (5.8 percent) and the lowest performing Republicans were Nixon (-3.3 percent) and George W. Bush (4.4 percent).
Perhaps the most interesting finding was not in the averages, but in how much the data varied (moved up and down in this case) within the groups. My statistical program automatically generates Lavine's test, which tests the equality of the variations between the two groups. Most of the time, Lavine's test finds the variation within the two groups to be about the same. In this case however, the Republican group had statistically significantly more variation in stock prices than did the Democrats. To use a slightly exaggerated analogy, investing during a Democratic administration is like putting your money on a merry-go-round market; it his small ups and downs. Investing during a Republican administration is like putting your money on a roller coaster market; be prepared for wild and sometimes dangerous changes.
The bottom line can be surmised as follows. This evidence simply doesn't support the trickle down theory. The Democratic model is slightly more promising, but it is too close to call. Republican administrations have historically ruled over periods of relatively high stock market risk. Highly skilled (or lucky) persons who make their living off from highly volatile markets such as speculators, day traders and futures traders have the potential for higher returns under Republican administrations
Previous Page Page 2 of 3 Next Page 
