The Stock Market & Presidential Elections

by | Oct 20, 2020 | Investor Behavior

The 2020 election has proven to be one of the more contentious elections in recent history.  However, that seems to be par for the course when it comes to elections.  “Contentious” is not a new adjective to describe Presidential elections.  From the political match-up of Jefferson v. Adams to this year’s Biden v. Trump, mud has always been slung, accusations have always been made and uncertainty seems to be everywhere.

The internet and social media have definitely changed how we consume information about the elections over the last handful of years.  Facebook posts, email blasts, TV ads, you name it – we are constantly being bombarded by political messages every day.  

Pair this with the fact that 2020 has been anything but ordinary, and you have an election year truly like no other.

Take the Emotions Out of Investing

Whether you’ve been guilty of it yourself or you’ve seen others take part, social media channels like Twitter and Facebook make it all too easy to share all kinds of information. This is true in any instance, but it can be especially effective when these posts are about political candidates.

The problem is, being inundated day in and day out with information about our country’s political future (especially information that’s alarming or scary) can take its toll on anyone watching or listening. You’ve already heard the predictions – “If Biden wins, the stock market is sure to tank.” Or, “If Trump gets re-elected, the stock market is sure to tank.” Whether it’s a pundit talking on television, or your co-worker in the break room, EVERYONE seems to have an opinion.  What does this mean for your investments?

As an investor, you have a few responsibilities here.  It’s important to try and make a conscious effort to drown out the noise on social media and financial TV. Think about YOUR personal financial goals and make sure to keep in regular contact with your investment advisor. He or she can offer the educated, unbiased advice you need to stay on track in the face of uncertainty.  Whether it’s a contentious election, a pandemic, or something else – there will always be something making headlines and moving the markets. As fiduciaries here at Mullooly Asset Management, we have a legal obligation to act in YOUR best interest.

Historical Stock Market Performance During Election Years

Just because the stock market has acted certain ways in the past does not guarantee it will continue to do so in the future. But as an investor, it may interest you to see how the stock market has performed historically during and after presidential elections years. Below we’ve charted out the S&P 500 returns since the 2000 election:  

Election Year Presidential Candidates  Performance During Election Year  Performance For Following Year 
2000 Bush v. Gore -9.10% -11.89%
2004 Bush v. Kerry +10.88% +4.91%
2008 Obama v. McCain -37.0% +26.46%
2012 Obama v. Romney +16.0% +15.06%
2016 Trump v. Clinton +11.96% +21.83%

Additionally, below shows the S&P 500’s percentage of return during a president’s full term dating back to 1981. This information was gathered from YCharts and presented by Forbes:

President  Years S&P 500 Return
Donald J. Trump (R) 2017- +43%
Barack H. Obama (D) 2009-2017 +182%
George W. Bush (R) 2001-2009 -40%
Bill J. Clinton (D) 1993-2001 +210%
George H.W. Bush (R) 1989-1993 +51%
Ronald W. Reagan (R) 1981-1989 +117%

There are so many differing factors that play into market performance.  Simply basing your long-term investment decision on which political party is in power is not a recommended strategy.  As you can see above, the stock market hasn’t cared if a Democrat or Republican is in control, and you shouldn’t either when it comes to your investments.

If the upcoming election has you worried about the future of your portfolio, take some time now to speak with your investment advisor or financial planner. They may be able to provide important insights into whether or not your investments are still aligned with your long-term goals.  If you don’t have an advisor, we would be happy to speak with you.  Click here to schedule an initial call with our team!


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