01/07/2008

Bipartisan Market

Hello:

It appears that bulls and bears don't care much about donkeys and elephants. The US stock market looks to have been primarily apolitical for the past 80 years or so.

In studying the correlation between the S & P 500 and the dominant political party in either the executive branch and/or the legislative branch from 1926 to present, there is not a consistent relationship between party dominance and market performance. In other words, a Republican government or a Democrat government has no positive or negative effect on stock prices overall. In years of presidential elections, we see evidence that the market rose 8 out of 12 years (67%), fell 2 out of 12 years (16.5%) and was overall neutral 2 out of 12 years (16.5%).

However, we did notice that the market dislikes uncertainty. In the years where a new party was elected, the statistics were less optimistic. The market rose 50% of the time, fell 25% of the time and was essentially neutral 25% of the time.

Due to the above data, we conclude that, for the most part, the market is bipartisan and overall politically neutral.

We believe that a well balanced portfolio with a sensible asset allocation that is tailored to your personal wants and needs has a better opportunity to perform in any type of market. Please feel free to call us if you have any questions regarding the asset allocation your portfolio.

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager