As we dive into this election season, I know many of you are wondering, “How will this all affect my finances?” It’s a great question, and honestly, there’s not a huge difference when it comes to the stock market and who’s in charge.
The chart below shows the stock market's historical performance, whether a D (democrat) or R (republican) appears after the President’s name. As the chart shows, the best average annual returns have come in periods when one party is in the Executive Branch while the other party holds the reins of one or both bodies of Congress.1
Historically, the best average stock market returns often happen when one party controls the presidency while the other party holds at least one chamber of Congress. This suggests that when different ideas come together, it creates a better environment for businesses to thrive. Plus, Wall Street has gotten pretty good at adapting to whatever’s happening in Washington.
Now, I know that with Trump running again, some of you might be feeling anxious about what that could mean for the economy and your investments. It’s natural to have concerns, but it’s important to remember that the stock market has weathered various administrations over the years, regardless of party affiliation.
In fact, markets can react positively to a Trump presidency, especially if he focuses on business-friendly policies like tax cuts and deregulation. Historically, many investors have found that as long as the economy remains strong and corporate profits are solid, political outcomes tend to have less of an impact on long-term investments.
Many people are passionate about the upcoming election—it’s not just about the presidency, after all. With 34 Senate seats, 435 House seats, and countless state and local issues on the ballot, it’s an important time to be informed and make your voice heard. Voting is a cornerstone of democracy!
When we craft financial strategies, we make sure to account for major events and potential market bumps. So, as we head toward the election, it’s vital to stay focused on your investing goals and not react to short-term market ups and downs.
Just remember: past performance doesn’t guarantee future results. So while it’s great to stay engaged and informed, keep your long-term vision in mind. We are here to help you build a solid plan, to help you weather any storm that comes your way!