Why are stock returns lower under Republicans?

Jul 27, 2017

Sections Finance Video

Collections Politics

Though Republican presidential candidates often campaign on pro-business policies, historically the stock market has performed significantly worse when there’s been a Republican in the White House. Chicago Booth’s Lubos Pastor and Pietro Veronesi find that the reason has to do with timing, economic cycles, and voters’ tolerance for risk.

 

CORRECTION: An earlier version of this video indicated the annualized return for the S&P 500 during Barack Obama's administration was 16.4%, while during Ronald Reagan's administration it was 4.23%. Those figures are inaccurate. The video has been updated to reflect average market returns in excess of the three-month treasury bill rate, which were 14.35% under Obama and 4.23% under Reagan. Chicago Booth Review apologizes for the error. The original video can be viewed here: https://www.youtube.com/watch?v=rtST6ASCILU.