Elections Move Markets: Fact or Fiction?
As November draws near, we can expect a flood of headlines, opinions, and discussions about the presidential election. Among the most frequent topics will be speculation on how the election results might impact the market.
While the President will certainly have a large influence on policy, which in turn affects the economy, trying to time the market based on election cycles and results has proven historically to be a losing battle. Past returns of the S&P 500 show that shifting your portfolio due to the election is making a bet against the data.
- Average return: 10.4%
- Average return during election years: 11.6%
- Average return the year after an election: 10.7%
For those of you who lean to the pessimistic side, if you invested at the record high on 10/9/2007 before the Financial Crisis, your average return would have been 10.0%.
What’s the takeaway?
The data shows that the market’s long-term performance remains consistent, regardless of whether it’s an election year or which party is in office. While you may have personal preferences about politics, history demonstrates that stocks tend to navigate policy changes and continue to perform well.
Although policies do influence economic growth, your portfolio has been meticulously designed to align with your unique financial plan and goals. This strategy anticipates and incorporates the inevitable market volatility we will encounter throughout our investing journey. There’s no need to change your course when volatility arises; it’s already accounted for in your plan.
As you sift through the news and encounter alarming headlines in the coming month, remember that we are here to support you. Please don’t hesitate to reach out to us. We are always ready to provide context and engage in meaningful discussions about your personal financial situation.
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