Red, Blue and You

Americans will soon be bracing for a barrage of political signs, commercials, and mailers as the 2020 presidential race approaches. A common question from clients is, “who is better for the markets?” Our answer is based on historical data. Generally, investors have done well regardless of which party held the presidency. As research from Capital Group shows, markets always climb the wall of worry, whether that is geopolitics, economics, or military conflicts.

Capital Group: The chart below shows the growth of a hypothetical $10,000 investment made in the S&P 500 at the beginning of each election year, starting in 1936. The party affiliation of the president-elect had no bearing on how well that investment performed over 10 years. In all but one period, it grew.

 Each 10-year period begins on January 1 of the first year shown and ends on December 31 of the final year shown. For example, the first period listed (1936-1945) covers 1/1/36 through 12/31/1945. The S&P 500 is unmanaged and, therefore, has no expenses.

Further, stock market returns (as represented by the S&P 500) have been negative in two election years but positive in 12 elections years since 1960.

In the end, the market is more concerned about companies than presidencies.

Capital Group Chart

So vote for whom you like best (or dislike the least). And take heart that your journey toward retirement and beyond will outlast this presidency and likely many others.