Dear Mr. Berko: Several of my well-read colleagues (we’re all engineers) believe that the Department of Labor wants to merge private individual retirement accounts and 401(k) accounts with our Social Security program to cover the huge shortfall. What are your thoughts on this?
And please settle a bet between me and my wife, who can be a know-it-all. Does the stock market do better under a Republican president or a Democratic president?
— G.S., Santa Barbara, Calif.
Dear G.S.: Good luck!
If we go back 71 years, to 1945, the obvious answer is that the market does much better under a Democratic president than it does under a Republican president. If you were keeping tabs during the past three score and 11 years (Standard & Poor’s was), the market gained nearly 50 percent more under a Democratic president than under a Republican president. Though, to some voters, this is heretical and offensive.
Sam Stovall, chairman of the S&P Investment Policy Committee, says the Democrats are way ahead of the game. Stovall, who joined S&P in 1989, notes that since 1945, the average annual S&P gain under a Republican presidential term has been 6.7 percent. The average annual S&P gain under a Democratic president has been 9.7 percent. That’s almost 50 percent better. According to the estimable Stovall, the only two presidents with negative average annual returns (both Republicans) during their office terms were Richard Nixon (minus 5.1 percent) and George Bush the Younger (minus 4.6 percent). That’s the Gospel according to Merrill Lynch, Pierce, Fenner and Beane.
