JOHN MCCAIN AND BARACK OBAMA have each promised lower taxes, health care reform and a healthier economy if only he s elected. But with all the turbulence in the market these days, investors are looking beyond the usual suspects for a sign as to what may come. So what are the prospects for stocks once a new president takes office?

You may be surprised to hear it, but if history s any guide, a Democratic win could give your portfolio a lift. Since 1944, stocks have fared better when Democrats held the White House, rising an average of three percentage points a year more than when the GOP held sway, according to Standard & Poor s. That said, stocks tend to gain just 5.2 percent a year in the freshman year of a presidential term, well below the average annual return of 9 percent. And the outlook for the markets and the economy these days is quite sluggish, says Brian Levitt, an economist with OppenheimerFunds.

Regardless of who wins, the best time to buy stocks seems to be right before the third year of a presidential term. By then presidents have usually taken the politically unpopular steps (like raising taxes), and they ll often try to stimulate the economy to get reelected, says Sam Stovall, chief investment strategist at S&P Equities Research. Indeed, since World War II ended, the only time stocks haven t risen in the third year of a presidency was 1947, when the Cold War was starting. Junior-year gains have been big too, averaging 18 percent.

Of course, presidential cycles tell only part of the story. Inflation, interest rates and corporate earnings play a role as well. And stocks have been beaten down for a while, leading some strategists to forecast a rebound next year. No bear market lasts forever, says Stovall, who expects technology and health care companies to lead when the market comes back. Robert Doll, chief investment officer of global equities for BlackRock, also likes the health care sector heading into 2009. There s a lot of noise about reform, he says, but we think damage to the sector will be a lot less than the consensus thinks. Here s hoping the markets will rebound faster than the consensus thinks too.

Their First Year in Office

Bill Clinton, 1993
S&P 500 rose 7 percent. Remember It s the economy, stupid ? The markets certainly did. A weak economy in the early 90s set the stage for a rebound, and stocks took off.

Ronald Reagan, 1981
S&P 500 fell 9.7 percent. Wall Street wasn t convinced it was morning in America. The economy was still reeling from high interest rates and rising unemployment, and stocks didn t rally until later in his presidency.

John F. Kennedy, 1961
S&P 500 soared 23.1 percent. Despite his narrow margin of victory, the markets warmed up quickly to JFK. Stocks posted their best freshman-year gains in a president s first term since 1945.