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Markets eyeing Clinton's slumping campaign warily: Analyst

Trump trouble for stocks
Trump trouble for stocks

Capitalism may be the crux of the Republican platform, but if you want to make money in the years after your candidate takes office, history suggests you're better off picking a Democratic than a Republican.

"Going back to 1900, the Dow has seen an annualized gain of 8.9 percent under Democratic Presidents and a gain of 3.8 percent under Republican Presidents," Paul Hickey of Bespoke Investment Group told CNBC's "Fast Money" traders last week. "So there's a big disparity there."

According to Hickey, there have only been two democratic presidents in history that have had a negative impact on the Dow Jones Industrial Average: Woodrow Wilson and Jimmy Carter. Each of those administrations only led the Dow lower by less than one percent over the course of their respective tenures.

That data and recent events suggest that Wall Street, which currently prefers former Secretary of State Hillary Clinton to real estate mogul Donald Trump, may not get the president it wants. According to the Iowa Electronic Markets, a prediction online betting platform, the probability that we'll see a Democrat take the White House in 2016 is shrinking fast.

Hillary Clinton
Getty Images

"The Democratic candidate was all but a certainty to win the presidency less than a month ago—it was at 74 percent and it's down to 58 percent today," said Hickey.

Clinton's chances have dwindled as her campaign stumbles under the weight of a controversy over her use of a private e-mail server while in office, as well as a stiff challenge from Vermont Senator Bernie Sanders.

Hickey notes that other betting markets have shown similar but less extreme declines in those odds. Betfair, another popular betting market, shows Clinton's chances dropping from 75 percent to 66 percent.

"The gap is narrowing," said Hickey. "What everyone thought was impossible a few weeks ago, is less and less unlikely now."

Until two weeks ago, the predictive marketplaces and the S&P 500 Index were tracking very closely together, supporting the notion that the market, for now, would prefer Clinton. That is because, according to Hickey, she's more predictable than the boisterous Trump.

"The markets tend to prefer Democratic candidates," said Hickey, employing a quote once attributed to former president Harry Truman.

"As someone much smarter than me once said – If you want to live like a Republican, vote Democratic."