Hoping for Gridlock?

Political pundits have forecast that the Republicans stand a pretty good shot at taking back the House of Representatives in this November's elections. No matter how you feel about this from a political standpoint, it could be good news for your portfolio. When a Democrat has controlled the White House and the Republicans have controlled the House, the S&P 500 has gained an average of 15 points per year, according to Bloomberg News. That's the highest rate of any combination of party control of the various branches of government.

The last time we had a Democrat in the White House and the GOP in charge of the House, it was when Bill Clinton and Newt Gingrich were facing off after the 1994 midterm elections. In 1995, the S&P 500 gained 34 percent, its largest increase in 37 years.

Of course, the high-tech stock boom probably had more to do with that then any government in-fighting did. But many investors see government gridlock as a real plus for the markets. Billionaire investor Kenneth Fisher told Bloomberg, "What the markets want to see is no change: less legislation that engages in changes in taxes, spending, regulation or property rights."