Historical Perspective of Elections and Markets

February, 2024

As we venture into 2024, the political landscape is poised to dominate headlines worldwide. It’s natural for investors to seek a connection between who wins the White House and which way stocks will go. But a look at history underscores that the outcome of an election is only one of many inputs to the market.

It’s crucial for investors to grasp that their investments are in companies rather than political parties. Although each president will have an impact on the economy and markets in their own way, the value and performance of companies depend primarily on the business fundamentals, market dynamics, and management decisions of those companies, rather than political affiliations or agendas. Political landscapes can be volatile and subject to change, potentially impacting regulations, policies, and market conditions, but a company’s ability to innovate, generate revenue, manage costs, and adapt to various environments is what ultimately drives its success and shareholder returns.

Presidential elections are important politically but can distract investors financially. Simple statistics of stock performance by political party overlook the economic cycle, resulting in skewed results. Policies take time to implement. Lagging the results shows that there is little difference over time from a market perspective.

The bottom line: While political uncertainty may fuel short-term market volatility, it’s essential to maintain a steady hand and focus on the long-term prospects of your investment portfolio. By staying resilient and grounded in your investment strategy, you can navigate through the turbulent political waters with confidence.



On the left the figure shows the average annual total returns depending on Democrat or Republican presidencies. On the right, the average one-year lagged returns are compared. Date Range: January 1933 to present. Source: Clearnomics, Standard and Poor’s

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third party data which may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article.