Global Investing

As Democrats and Republicans kick off the final countdown to the Nov. 4 election, strategists at U.S. investment bank Lehman Brothers have done some interesting data mining.

Figures looking back economic conditions in 1948-2007 show the economy under Democrats enjoyed a higher GDP growth rate (4.2 percent vs 2.8 percent for Republican adminsitrations) and a lower average unemployment rate (5.1 percent vs 5.9 percent).

Looking at a longer timeframe since 1828, however, Lehman strategists found that government and corporate bonds fared better when a Republican occupied the White  House (it excluded Whigs).

On average, Treasury bonds returned 4.82 percent preceding an election year with a Republican incumbent (3.38 percent for a Democratic one).

Equities fared less well with a Democratic incumbent during an election year (9.13 percent) while averaging 13.76 percent with a Republican incumbent during an election.

But Lehman ends the research with a disclaimer: “Trading rules based on such long-term averages suffer from potential data-mining distortions… Before embarking upon any portfolio course based mainly on ‘election-cycle averages’,  let’s wait for the outcome of the election.”

 (Photo: Mike Segar/Reuters)