Introduction
The null hypothesis is wrong since the two group means are not equal. The monthly mean returns for the Democratic Party group is greater than that for the Republican Party. Therefore, Democratic Party is best for the investors. Since 1926, American stock market has essentially experienced gains of 300 percent. However, the net gain under the Republican administrations has been zero percent during a similar period. This implies that a person who started to invest in the stock market in 1926 with 10,000 US dollars during the administrations of both political parties would have earned 11,733 U.S dollars under the republican administrations and 333, 671 under Democrats administrations. This means that democrat party is 25 times better in managing the stock market than the Republican Party. This difference is much bigger.
It is even mathematically reasonable that one can have no return on his or her investment under the administrations of Republicans. The way the two political parties have been responding to the stock market crashes since 1926 also proves that the null hypothesis is totally wrong. The Democratic administrations have formulated better strategies than the Republican administrations from 1926.
The other fact that shows that the Democratic administrations are better in managing the stock market better than the republican administrations is the annual gains received by S&P 500. It has received annual gains of roughly 12% from 1901 under the Democratic administrations as compared to the less than half received under the Republican administrations. The mean returns for equal-weighted market index are also different. The mean for EWRETD under Democratic administrations is greater than that under Republican administrations. Various studies by financial experts have proved that Democratic administration is much better in managing the stock market.
