Election Cycle and Market Returns

Election Cycle and Market Returns

May 05, 2024

It’s that time… a year divisible by 4. That means it’s time for Americans to decide who will be our president for the next four years. I’m sure we all have opinions on the direction our country is headed, and thus have an idea who might be the best leader for our country in the next cycle. Let’s take a moment and investigate what that may mean for your investments.

The number one question I’m asked by clients in years such as this is: “if _______ is elected, what will happen to my money?”. The number one worry I’m presented with by clients is “If ______ is elected, I’m afraid my investments will lose value.”

Several entities have looked into those issues, and the evidence seems to point out that the presidential cycle has relatively little to do with stock market returns. My colleagues at LPL Research released some definitive numbers to back that up.

“Since Eisenhower’s inauguration in 1953, $1,000 invested in the S&P 500 only when a Republican was President would be worth $29,000 as of April 27th, 2024, versus $57,000 when a Democrat occupied the White house.”

So there’s our smoking gun, right?! Money invested during Democratic administrations is worth more! Aha!!!!

Not so fast. That same article points out that the same $1,000 left alone, invested regardless of who was president, would be worth $1.67 million. That’s million. Not $57,000. Not $29,000. $1.67 million.

U.S. Bank attempted to measure something a little different, looking at market performance immediately before and after an election cycle (Group, 2024). While they found some correlation with the election and market returns, they also found that there were other factors like inflation and economic growth that were much more significant.

In short, don’t let the presidential cycle scare you away from smart investment strategy. It may not matter as much as you think it does.

As always, you can find this article and many more about investing and the state of our investment landscape at our website, www.paducahfinancialconsultants.com.

The opinions voiced in this material are for general information and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.