Presidential Elections and the Stock Market
November 4, 2024
As Election Day draws near, investors may reasonably wonder what impacts the U.S. Presidential Election might have on their nest egg. Some may even be so inclined as to “vote with their portfolios” by making changes to their investment allocations based on their expectations of the outcome. We believe investors should strive to limit the impact emotions and short-term thinking have on investment decision making. A look at historical data shows us that control of the White House by a particular political party has little impact on capturing long-term returns of equity markets.
Returns by Presidential Term
S&P 500 Index
1/1/1933 - 9/30/2024
While it may be tempting to draw conclusions from the averaged returns, the broader observation is that the data is not strongly tilted toward one party. Both major political parties have delivered periods of strong performance and weak performance. In fact, if we remove the two consecutive Bush terms from 2001-2008, where returns are heavily influenced by the Dot Com Crash and Great Financial Crisis, the average returns become nearly identical between the two. To that end, we find the chart below to be a far more compelling view of long-term returns
The most important point for investors to bear in mind is that, over the long term, U.S. equity returns have been quite strong regardless of which party controls the Presidency. The U.S. enjoys the world’s single largest economy which accounts for nearly 22% of global economic output, maintains the most widely used currency in all of global trade, and commands a strategically important position within global financial markets.1 While the President may exert some influence in the areas of policy and diplomatic relations, the U.S. economy and financial markets are ultimately not directly controlled by the executive office and have an established record of weathering many political environments.
With all of the modern day media attention surrounding Presidential elections, it’s easy to get swept up by emotions and view the world through our own political perspective. However, we believe prudent investors should recognize that the U.S. economy and its financial markets are a remarkably complex system influenced by countless factors of which the President’s actions are just one.
At Stadion, we think it is important to maintain a focus on one’s own long-term investment goals, risk tolerance, and personal financial situation.
Hunter Brooks
Portfolio Manager
1The Global Role of the U.S. Economy, World Bank Group, https://documents1.worldbank.org/curated/en/649771486479478785/pdf/WPS7962.pdf,
pg. 4
The S&P 500 Index is the Standard &Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices.
The Reports' commentary, analysis, opinions, advice, and recommendations represent those of Stadion Money Management and are subject to change at any time without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass Stadion reserves the right to modify its current investment strategies based on changing market dynamics or client needs. This document may contain certain information that constitutes“ forward-looking statements” which can be identified by the use of forward-looking terminology such as “may,” “expect,” “will,” “hope," "forecast,” “intend,” “target,” “believe,” and/or comparable terminology. No assurance, representation, or warranty is made by any person that any of Stadion’s assumptions, expectations, objectives, and/or goals will be achieved. There is no guarantee of the future performance of any Stadion portfolio. This material is for information use only and should not be considered financial advice. The data presented has been gathered fromsources believed to be reliable; however, their accuracy, completeness, or reliability cannot be guaranteed. We make no warranties and bear no liability for your use of this information.
Stadion Money Management, LLC ("Stadion") is a registered investment adviser under the Investment Advisers Act of 1940. Registration does not imply a certain level of skill or training. More information about Stadion, including fees, can be found in Stadion's ADV Part 2,which is available upon request.
Past Performance is no guarantee of future results. Investments are subject to risk, and any of Stadion’s investment strategies may lose money.
SMM-2410-54