That suggests stock market investors would be well-advised to spend a bit less time worrying about Washington's political drama and more time fretting about the economy and corporate earnings. Currently, the Dow Jones industrial average is 18 percent from its July high. But the economic problems were much worse then. The U.S. stock market started diving in early 1973, as the festering Watergate scandal was muscling its way onto the national stage. Similarly, this year, the Dow Jones industrial average started tumbling July 20, not long before news broke that President Clinton would give grand jury testimony about his relationship with Monica Lewinsky and related allegations of perjury and obstruction of justice.
Investors hate uncertainty, and the possibility of resignation has clearly rattled some investors.
But this year, as two decades ago, presidential problems aren't the big driver of the stock market, Siegel argues. Nixon was a lesser problem. The same thing holds today. The real problem is the worldwide deflation and currency crisis and its influence on earnings. The presidency is secondary.