The historical trend doesn’t overwhelmingly favor one party over another. But keep this in mind: The election is probably having its greatest influence on Wall Street right now. Investors don’t like uncertainty, whether it’s uncertainty in elections, earnings or anything else. Presidential polls that show a narrowing gap between the candidates give Wall Street palpitations.

That’s good for investors who can run contrary to the crowd.

I’ve always believed that you should use the market’s weakness to do some buying. If you’ve been saving some extra cash, you may want to deploy it as the campaign heats up. When the furor dies down after the election, Wall Street will once again focus on interest rates and earnings, the two factors that have more to do with where stocks go than anything else.

No matter which candidate finally wins, you can rest assured that there will be a much greater focus on economic issues for the next few years than there has been in the previous few. And that, ultimately, should be good for the market and investors (see also, “Presidential Profits for Your Portfolio.”)

Here are but a few of the many statistics used to bolster the case for a bull or bear market based on the election outcome. If the findings prove anything, it is that statisticians from both political parties can claim bragging rights to the stock market’s long-term gains.

Why It Pays to Elect a Democrat

Since 1901, the Dow Jones Industrial Average has risen at an 8.5% annual rate under Democratic presidents. (Up only 6.4% on average under Republicans.)

Since 1926, the S&P 500 has risen an average 14.9% under Democratic administrations and has gained an average of 20.9% the year after an election where a Democrat succeeds a Republican. (Up just 9.7% on average when Republicans have held the White House and 11.6% when a Republican replaces a Republican in the White House.)

Real GDP under Democratic presidents has risen…

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an average of 4.4% per annum since 1948. (The Republican record: a 2.7% average gain.)

Why it Pays to Elect a Republican

Since 1901, the Dow Jones has risen in 11 of the 14 presidential election years when a Republican was elected. (It rose in just 7 of the 12 years when a Democrat won the vote.)

Stocks have risen in the latter half of an election year 13 of the 14 times that Republicans have won. The average six-month gain: 11.8%. (The market rose in the second half of 8 of the 12 years when a Democrat won. The average gain in those years was just 6.3%.)

See the following table for a few additional figures you can use to liven up a dinner conversation in the weeks to come.

And finally, since 1901, the Dow Jones Industrial Average has risen an average 8.9% during the last half of an election year. If that holds true in 2008, the Dow, which closed at 11350 at the end of June, can be expected to rise to 12360 by New Year’s, leaving the index with a 6.8% loss for the year. But, as the industry saying goes, “Past performance does not predict future performance,” and, I’d add, voters should have greater concerns than stock market results in mind when casting their vote for president.

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