Presidential scandals might grab headlines, but they draw a big yawn from the stock market, according to a report by Mark Stumpp, chief investment officer of PDI Strategies, Short Hills, N.J.
Mr. Stumpp studied the average monthly return of the Standard & Poor's 500 Stock Index during several famous American presidential scandals, from the Eisenhower through the Reagan administrations, including Watergate and Iran-contra.
"The trouble with scandals is that they generally take a long (sometimes, a very long) time to play out, which makes it difficult to assess their impact on stock prices," Mr. Stumpp wrote in the report.
Mr. Stumpp said stocks took their only serious hits during the final months of the Nixon administration; however those months also coincided with the first Arab oil embargo.
Adjusting for inflation, the stock market's steep plunge in 1973 and 1974 was worse than even the bear market of the Depression.
"Although Nixon's troubles may have contributed to the decline, the economy was the real problem," he said.
His bottom line: Investors are well advised to keep an eye on fundamentals and not on Washington.
