I've read a few articles about how the stock market is poorly correlated with GDP. GDP of all things! Corporate profits justify stock prices, not income inequality, unaffordable healthcare, crappy diplomacy, foreign wars, crime, or corruption in government.
Many companies would make more money in a world of monopolies, political bribery, falling wages, rising prices/margins, misallocated government priorities, or incompetent regulations!
Bottom line - what's bad for the people could be good for the stock market. You have to think with two minds rather than good/bad. Qui Bono?
That's the market's theory today, but sentiment could rapidly shift. At some point, the vandalism of success-driving systems like education, the federal reserve, checks and balances, etc. impairs the long term potential of an economy. For example, Mexico and the US started out as roughly equal twin democracies in terms of wealth and resources, but for some reason the US grew about 1% faster for a century. I personally think politics and culture are to blame.
If the US went the direction of Russia, Turkey, or Egypt I'm not sure what the market reaction would be. As best I can tell, markets only care about next quarter's earnings... That and not losing "safe cash" held at banks or in bonds when those banks or currencies collapse and inflation rises.
Reality is complex in the long run. Even if you knew the repeal of Glass-Steagal in 1998 would eventually lead to a credit crisis, you would still have made MUCH more money staying in the market than hiding in cash for a decade.