Which Political Party is Better for Investors?

Welcome to the 2024 election year.  Let the fun, drama, bob and weave begin!  Game on!  One of the biggest questions that we get during an election year is, “How is the election going to affect the market?”

As Brian explained in his “2024 Market Expectations” article, there is no evidence that politics play a significant role in the stock market.  Brian specifically said, “I would also like to remind everyone that there really is no statistical meaningful difference in stock market returns based on which party leads our country.”  Here’s a chart that backs that up.

Bottom Line:  U.S. stocks have trended up regardless of whether a Democrat or Republican won the White House.

Just to reiterate, here’s another chart from Goldman Sachs that summarizes the difference in average annual returns based on political party.

And finally, here’s one more chart that illustrates that a long-term approach can help investors withstand volatility and feel confident that markets have tended to move higher over time, even in election years.  It shows that, since 1932, stocks have gained an average of 11.3% in the 12 months following the conclusion of the primaries (using May 31 as a proxy) compared to just 5.8% in similar periods of non-election years.

In summary, current economic and political challenges may seem unprecedented, but history has shown that controversy and uncertainty have surrounded every campaign. And in each case the market has continued to be resilient over time. Successful investors stay the course and rely on time in the market rather than timing the market.  Our election year recommendation is to enjoy the show and express your view with a vote, not a trade.