8.9.2024

Spoiler alert: I hate this subject, but it rears its ugly head every election. It wears me down.

To be fair, we live in a 24-hour news cycle. It’s easy to miss the forest for the trees. We could go a million miles deep on this (if you’d like to go that deep, stop by with some bourbon and we’ll talk).

For what it’s worth I pulled together a few notes I hope are helpful.

Nobody’s right if everybody’s wrong

Does the winning political party determine stock market performance?

There is not robust data supporting one party over the other. There’s plenty of half-baked, partisan data supporting one side over the other, but nothing robust & statistically significant.

The stock market performs well with both Democratic and Republican presidents.

This is not just a US phenomenon. The team at Research Affiliates looked at Australia, Canada, France, Germany and the UK and found no systematic relationship between the political party in power and stock market returns. We greatly exaggerate the economic and financial role of political parties.

The press and campaign messaging are noisy but don’t let it distract you. Stick to your financial plan. Stay invested. 

Something happening here, what it is ain’t exactly clear

So many different factors determine the direction of the economy and financial markets. Many of these factors are far more influential than the person living at 1600 Pennsylvania Avenue.

In 2000, did the stock market crash because George Bush was elected or because the tech bubble burst?

In 2009, did the stock market rally because Barack Obama was elected or because the economy started to recover from the Global Financial Crisis?

Another example: both Presidents Obama & Biden strongly opposed the US energy industry as candidates and Presidents. But under Obama, US oil production increased over 70%. Under Biden it increased another 25%.

The president didn’t matter. What mattered was technological advancements like hydrofracking and directional drilling.

The President doesn’t control the economy or the stock market. There are many factors that strongly influence the economy and financial markets- election results are not one of them. Stick to your financial plan. Stay invested.

Everybody look, what’s going down

We have no idea what the stock market will do if Harris/Walz or Trump/Vance wins in November. What we can guarantee is you will underperform if you let your political opinions drive your investment strategy.

Playing political favorites means sitting on the sidelines and you don’t make money sitting on the sidelines.

Over the last 100 years, the stock market returned over 8% a year. $10,000 invested then would be worth over $28 million today. No single president or political party is responsible for this performance.

Every week, 168 million people go to work and add value to the US economy. Don’t let politicians take credit for this.

Stick to your financial plan. Stay invested.

Disclosure:  Unless stated otherwise, views, opinions or forecasts expressed in this blog are those of the author and do not necessarily reflect those of the Adviser and/or its employees. The contents of this blog are distributed for informational purposes, and are not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Nothing in these communications is intended to be or should be construed as individualized investment advice. All content is of a general nature and solely for educational, informational, and illustrative purposes.

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