Election years, particularly presidential elections, traditionally come into focus after Labor Day. This is when many American voters become fully engaged with the process. With that in mind, we often get the question: “Politics aside, which way is best for my bottom line?”
It’s a fair question, and we’ll offer you a fair answer: Would you believe there’s not much difference?
The chart below shows the stock market’s historical performance, whether a D or R appears after the President’s name. As the chart shows, the best average annual returns have come in periods when one party is in the Executive Branch while the other party holds the reins of one or both bodies of Congress.1
But it’s important to remember that past performance does not guarantee future results.
Why is that? Maybe the system works best when a diverse group of ideas meets face-to-face and comes to a compromise. Or maybe Wall Street has learned how to adapt to the goings on in the District of Columbia.
You may be incredibly passionate about the election’s outcome. It goes beyond the White House, too. There are 34 Senate seats, 435 seats in the House, and a wide variety of state and local issues on the ballot this year. Voting is one of the pillars this country was founded upon, so I am sure many of you are reading up and making careful choices about the nation’s future.
When we worked on your financial strategy, we made it so that it considered major and minor events, and we prepared for volatile periods. As a result, no matter the outcome, keep focused on your investing goals as the election approaches and try to avoid overreacting to short-term market volatility.
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