Election Jitters?

What’s the Market Going to Do After the Election?

We get this question a lot, and it totally makes sense. After the debate, politics and how they affect the stock market and economy are on everyone’s mind. With the election coming up, it’s normal to wonder how the market might react depending on who wins.

We all have our own political views, but it’s important not to let them influence your investment decisions. There’s this common feeling that “This Time is Different,” but is it really? History may not repeat itself exactly, but it often follows similar patterns. Every president and Congress faces their own set of challenges, whether it’s economic, social, or foreign policy-related. It’s easy to think, “If this person gets elected, everything’s going to change,” but since we can’t predict the future, it’s better to look at how things have played out in the past.  Click the link below to see market performance during each president's term and why it's important to take a long term perspective...

https://www.dimensional.com/us-en/insights/how-much-impact-does-the-president-have-on-stocks

How Does the Market Typically Perform in Election Years?

Since 1950, the S&P 500 has averaged a return of about 9.1% during election years. If things keep going the way they have this year, we could beat that. That said, election years do tend to get more volatile as the vote gets closer. September has historically been the weakest month in election years, with an average S&P 500 drop of 0.80%. On the flip side, October tends to average a 1% gain, but it’s also the most volatile month, with a lot more price swings. In fact, October is usually 35% more volatile than the rest of the year.

What Happens After the Election?

The market really doesn’t like uncertainty, and elections create plenty of it. Once the result is clear, the market usually reacts to the winning candidate’s plans around taxes, the economy, and other policies. Over the long term, both Republican and Democratic presidents have generally seen positive stock market returns. Of course, there are exceptions. For example, George W. Bush saw the S&P 500 drop an average of 5.6% per year during his presidency, thanks to things like 9/11, the dot-com bust, and the Financial Crisis. But overall, since 1929, only three presidential terms have seen negative market returns. On average, the S&P 500 has delivered annualized returns of 9.5% during a president’s term.

The Bottom Line

At the end of the day, things like corporate earnings and interest rates are what really drive the market. Right now, interest rates are a big factor in what’s going on. American companies are resilient and have shown they can adapt to whatever comes their way—whether it’s politics, the economy, or other challenges.

So, the takeaway? It’s better to focus on long-term fundamentals rather than get caught up in short-term political changes.

As always, if you have any questions or want to chat about your specific situation, don’t hesitate to reach out!