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WOULD AMERICAN INVESTORS BENEFIT MORE FROM A GOP OR DEMO VICTORY?

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Over the past 92 years, the return on stocks has seemingly been higher during Democratic than Republican administrations - until you consider the inflation factor.

That factor is huge, demonstrated by the fact that it reverses the outcome. That is, after deducting for inflation, the best real returns came during the Republican years.The results, compiled by Wright Investors Service, show that in the 52 Republican years the nominal return on stocks was 11.7 percent, compared with 13 percent for the 40 Democratic years.

But, while the real or after-inflation calculation brought the Republican return down to 9.3 percent, it cut the Democratic showing much more, all the way down to 7.4 percent.

The inflation factor was worse on bonds. In nominal terms, bonds achieved an average annual return of 7.2 percent in Republican years versus 3 percent in Democratic years.

Inflation cut the yield in Republican years, but only to 5.1 percent, regarded as a fair showing. But in Democratic years the return fell all the way to a minus 1.8 percent.

While such comparisons have some value, they also have limitations created by factors such as depression and war. Moreover, one administration may inherit problems from another. And there are factors beyond any administration's power.

Did the postwar boom, for example, result from administration policies or from pent-up demand? And what role did any administration play in the baby boom that forced changes in spending and living patterns for decades?

Nevertheless, the investment results associated with the two major parties tend to reinforce public notions of party policies. The results have influenced how people voted in the past and probably will again.

However, voters today are confronted with financial and related concerns that might rate higher in importance than investment returns. They're concerned with jobs, debts and incomes, for example, and with financial survival rather than progress.

The economic reality today is that job openings are declining rather than increasing, job insecurity is high, wage increases have stagnated, debts are at suffocating levels, confidence is low and expectations even lower.

In short, rather than hoping to improve living conditions, many families are seeking simply to maintain their current status. Confronted with that reality, investment returns may not rate very highly.

On a larger scale, household debt and insecurity are matched on the national level by the biggest budget deficits ever - and the possibility they could grow even worse.

Efforts to correct the federal budget deficits while simultaneously spurring the economy to greater growth could force either major party out of its traditional role, with resulting consequences for investment returns.

It forces the conclusion that nobody can say whether a Republican victory will be better for investors or that a Democratic administration will be worse.

Either party could be forced to deal with events that have little to do with philosophy or policy, with consequences for investors that might not resemble the long-term annual averages.