On Aug. 19, I moderated a debate between Steve Moore and Peter Schiff at the MoneyShow Virtual Expo. At one point, I raised the question of “who’s better for the stock market, a Republican or Democratic president?”
On its surface, the answer is surprising: usually a Democrat! From 1926 to 2019, the S&P 500 Index returned 9.1% when we had a Republican president, and 14.9% when we had a Democratic president. That’s a big difference.
Of course, much of the difference is due to Herbert Hoover, who presided over the start of the Great Depression and ended up with an annual return during his presidency of -27.2%!
And the president with the best record is Republican Calvin Coolidge, with an average stock market return (1923-1929) of more than 30%. Next comes Republican Gerald Ford with an 18.4% return. Democrat Bill Clinton (1993 – 2000) has the third best annual return of 17%.
The market has also stumbled this year with President Trump in office due to the virtual nationwide lockdown in response to COVID-19. Fortunately, Wall Street is making a comeback from a market crash in March and set record highs in the NASDAQ Composite and the S&P 500 on Aug. 18.
In reality, it’s best to look at the stock market returns and all three branches of government. The following chart shows the four possibilities.
Data from 1926 through 2019. Unified government means that the Presidency, the House of Representatives and the Senate are all controlled by a single party. Divided government means that at least one house of Congress or the Presidency is controlled by the other party.
Source: Bob French, CFA
It turns out that when either Republicans or Democrats control all three levels of government (Presidency, House and Senate), the average return is tied.
If you have a divided government (gridlock), it’s better to have a Democrat in the White House and the Republicans controlling at least one house on Capitol Hill. The worst performing group is when a Republican is in the White House and the Democrats control one of the houses on Capitol Hill.
We will find out if this pattern will continue after the next general election on Nov. 4.
Good investing, AEIOU,
You Nailed It!
Is There a Free-Market Alternative to AOC?
Rep. Alexandria Ocasio-Cortez (D., N.Y.), known as AOC, is considered the most influential freshman lawmaker in Congress — and she’s an avowed socialist who supports Medicare for All, free college tuition, a wealth tax on the rich and the Green New Deal. She’s also a big supporter of socialist senator Bernie Sanders.
Is there an up-and-coming free-market alternative? There just may be. In Florida’s 19th Congressional District, there is a rising House candidate who recently tweeted that, “Socialism is just another name for disaster.”
State legislator Byron Donalds won the Republican nomination to represent his Gulf Coast community in Congress. Donalds championed lower taxes and school choice in the state legislature. He helped found a charter school and makes the case that parents should have a say in school curricula.
Time to Defend Capitalism
How do you fight a bad idea? Answer: With a better idea! It is time to start a campaign to promote the best of capitalism and free-market economics.
How do we fight back? I’ve started a campaign to promote my book, “The Making of Modern Economics: The Lives and Ideas of the Great Thinkers.”
I call it “The Book the New Socialists Fear the Most.”
Now published by Routledge in a new third edition, it tells the unique story of Adam Smith, the founder of free-market capitalism, and how his “system of natural liberty” came under attack by the Marxists, Keynesians and socialists. Smith’s view of economics is initially left for dead, but then is resuscitated by the French Laissez-Faire School, the Austrians and the Chicago School. Smith triumphs in the end.
It has five chapters that rip apart the arguments that the socialists and the Keynesians make.
It has converted many Marxists to free-market capitalists, and one reviewer calls it “the most devastating critique of Keynesian economics ever written.”
Most importantly, my book introduces the reader to the great defenders of free-market capitalism, including Adam Smith, the French Laissez-Faire School and the Austrian and Chicago Schools (as represented by Mises, Hayek and Friedman).
My wife Jo Ann and I posed at the Panmure House, Adam Smith’s residence in Edinburgh, Scotland.
The Ayn Rand Institute recently ranked it the #2 most important book ever written about economics (just behind Henry Hazlitt’s “Economics in One Lesson”).
It won the Choice Book Award for Outstanding Academic Excellence. It has been translated into six languages — in Chinese, Spanish (Union Editorial), Turkish, Mongolian, Vietnamese and Arabic.
Students, fellow economists and business leaders are fans. Professor Roger Garrison (Auburn University) said, “My students love it. Skousen makes the history of economics come alive like no other textbook.”
“Skousen gets the story ‘right’ and does it in an entertaining fashion, without dogmatic rantings.”
— Peter Boettke, George Mason University
The late Milton Friedman wrote, “All histories of economics are BS — Before Skousen! Lively and accurate, a sure bestseller.”
John Mackey, CEO of Whole Foods Markets, said, “I have read it three times. It’s fun to read on every page. I love this book and have recommended it to dozens of my friends.”
The late William F. Buckley Jr. told me, “I champion your book to everyone. I keep it by my bedside and refer to it often. Every student should have a copy.”
Nicholas Vardy, the Global Guru, wrote the following:
“Your book is just outstanding across the board. It’s addictive and entertaining. I’m amazed how you integrate all the personal details of economists’ lives with their work. ‘The Making of Modern Economics’ deserves to be read and digested far and wide!”
The story behind this book is quite extraordinary. You can read it here.
How to Order at a Super Discount
“The Making of Modern Economics” is a 500-page book available in hardback, paperback, Kindle, or audio. The quality paperback retails for $53.95 if purchased through Routledge and $43.74 purchased on Amazon, but you can buy it for only $35 postpaid directly from Skousen Books, including postage. I will autograph each copy and mail it for free. (For orders outside the United States, add $30 for airmail shipping.) To order, go to www.skousenbooks.com.
I was interviewed on C-SPAN Book TV about “The Making of Modern Economics.” Watch the 20-minute interview here.
We can win the battle of ideas. Let the campaign begin!