Politics and Markets

From: Profits in the stock market by H. M. Gartley (1981), p.105, Lambert-Gann Publishing Co., Washington.

Politics must be given proper consideration in studying major trends. The evidence of the past 80 years seems to indicate that conservative administrations (Republican) are more likely to brred bull markets, while liberal administrations (Democratic) tend to breed bear markets. If a Democratic administration (liberal) is in power, and a bear market has been in progress for some time, the period between the election (early November) and the inauguration (early March of the succeeding year) is likely to be a major turning point to a bull market.

Conversely, if a Republican administration (conservative) had been in power for some time, the election of a Democratic administration (liberal) is likely to be the turning point to a bear market, providing a bull market has been in progress for some time.

Furthermore, if either a Republican (conservative) or Democratic (liberal) administration pursues a policy either through taxation or reformative legislation, which shakes the confidence of security owners, a bear market is likely to result, unless definite inflationary steps are pursued at the same time. Good examples of this are illustrated in the "Rich Man's Panic" of 1907 when Theodore Roosevelt " busted the trusts", and in the bear market in the utility stocks from July 1933 to March 1935. It seems obvious that if Franklin D. Roosevelt's administration had not pursued a policy of inflation, from 1933 onward, Industrial and Railroad stock prices would have also been in major decline.