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The Stock Market in Election Years

Insights Investing Stock Market Financial Planning

It is 2024, and that means the next “end of the world moment” for investors is on our doorstep, the General Election.  It has already been a hot topic for people from both sides of the political spectrum.   Today we try to add some historical context to election years and investment results.  

Watch Now: The Stock Market in Election Years


0:00 - Intro
 0:47 - What does history tell us about election year returns?
 2:11 - Returns under Democrats and Republicans
 3:27 - The legislature matters too
 5:42 - Politics and Investing can be a costly mix
 6:54 - What should you be doing?
 8:49 - Outro

All information compiled by First Trust Portfolios and used with their permission

Are Election Years Good Years?

Historical data tells us election years have been kind to investors.  The average, going back to Herbert Hoover's election in 1928 generated an average annual return of more than 11%. 

In years when a Republican was elected, stocks improved by an average of 15.3%.  In years when a Democrat was elected, stocks improved by an average of 8.5%.  

Keep this in mind:  this has no predictive power of what will happen in 2024.  The results in the investment world depend on much more than what happens on November 5th. 

Does the stock market like Democrats more than Republicans?

In general, the Republican party can be viewed as a more "business-friendly" party.  But the results show that the market has posted much better results when a Democrat occupied the White House.

Republicans happened to occupy 1600 Pennsylvania Avenue during some of the most historic moments for ugly stock market results.  Hoover, Nixon, and G. W. Bush were in charge during some of the most ugly downturns we've ever experienced.  

The average returns during the Democratic President's terms were nearly 15%—nearly twice as good as the Republican's 7.85% average.

It isn't just about the White House...

The legislative branch plays a major role in the governance of our country.  From the results, a divided government has led to the most favorable results.

The two best average periods occurred when one party could not make all of the decisions.  

No matter your opinion of the two candidates seeking the "big chair," the race for the House of Representatives and the Senate could be just as critical. 

Vote at the Ballot Box, Not at Your Custodian...

If you were to only be invested when your preferred party occupied the White House, it would have been an expensive mistake. 

Keep in mind, on average the stock market has improved 3 out of 4 years.  Those who missed those years found it to be hazardous to their wealth.  

You may despise the personality, the policies, and the beliefs of our President,  But cashing out your investment portfolio as a sign of your disgust, might cause more self inflicted harm than you desire. 

What do we know?

Nothing is certain in any year.  Just because we head to the voting booth in a few months doesn't change anything.  By the time we elect the next President and the next legislators, 85% of the year will be behind us.  Chances are there will be many other factors influencing the returns of both stocks and bonds.  Here are three things we are confident in saying.

  1.   The sun will rise in the east on Wednesday, November 6th (no matter the results of the election).
  2.   The leaders of the great companies we own will continue to focus on running profitable businesses.
  3.   The election will not have much impact on your personal goals

In the end, this is what matters.  

If you would like to speak to an advisor who can help keep you on path to reaching those most cherished goals...fill out the form below.

Appearing in this Video

Neal Watson & Evan Brockmeier

Neal and Evan are financial advisors in our Marietta, Ohio Office.