Since Bill Clinton won the presidency two years ago, the average individual's portfolio has risen only 12.1 percent, according to data gathered for Money magazine's Small Investor Index. That works out to a 5.9 percent annual rate of return, well below the 9 percent average that individuals have earned since 1970.
Small investors fared slightly better during George Bush's first two years as president. From Nov. 8, 1988, to the midterm elections in 1990, the average individual's portfolio grew at an annual rate of 6.2 percent. Indeed, history shows investors tend to do poorly during the first half of any new president's term, as the administration works to get unpleasant tasks behind it - like raising taxes - so the president can stress more positive moves closer to re-election.By far the best-performing asset of the Clinton years has been gold, which soared 66.6 percent on fears of higher inflation. The worst performer was cash investments, which gained only 5.9 percent. Over the same period, stocks rose 20.1 percent and bonds 7 percent.
Although investors typically do well in the second half of a president's first term, many strategists think economic worries will continue to weigh down the markets.
"With inflation expectations rising, gold and cash will probably outperform stocks and bonds, no matter which party controls Congress the next two years," says Robert Stovall, president of Stovall/Twenty-First Advisers, a New York money-management firm.
The most recent Money Index, which tracks the typical investor's holdings, gained $17 to $47,939. Stocks rose $99, and bonds dropped $83. CDs and money funds added $11, and gold declined $12.