I’ve been getting a lot of questions lately about how stocks are going to perform with the presidential election coming up in November. I can safely answer it the same way I answer it every year, and that is, I don’t know.

Factually speaking, going back to 1928, we have had 24 presidential election cycles. In 20 of those cycles, the S&P 500 has provided positive returns (87%). If a Republican was elected, the average return is 15.3% and if a Democrat was elected it was 7.6%. In all years the average annual return during presidential election years is 11.8%.¹ Now, I must admit that this election cycle offers some unique situations. Of the two presumptive nominees, one could very well be running from prison and the other from a memory care unit. It’s also an election that the majority of voters are not excited about. In a recent poll, 59% of registered voters are either “not at all” or “not too” enthusiastic about a Trump v. Biden rematch.² What impact, if any, will this have on the election? There always seems to be some type of conflict going on somewhere in the world and typically those have a short-term impact on the financial markets, but right now it seems like we are heading to more of a world war. Russia and Ukraine; Israel and Hamas, with Iran poking its head in through the terrorist groups it supports. Then there is China wanting to bring Taiwan into the fold. I’ve voted in 12 presidential elections, and I cannot remember one where there is such division and contentiousness within the voting public. Everybody is mad at somebody. Historically, people tend to vote their pocketbooks. If you’re feeling pretty good financially, that bodes well for the incumbent. If you’re not, then you tend to vote someone new in. The economy seems to be chugging along pretty well, but there are a lot of families who are still struggling to make ends meet.

So there are a lot of things that feel different to me this election cycle. There are lots of things going on that can make headlines. I’m preparing for a fair amount of volatility in the financial markets this year, and where things end up December 31, 2024, is anyone’s guess. If history is any guide, we’re looking at an 89% chance of positive returns in stocks for the year, or an 11% chance of a negative return.

Time will tell.

Sources:

  1. https://advisor.morganstanley.com/the-ernie-garcia-group/documents/field/e/er/ernie-garcia-group/S%26P%20500%20in%20Presidential%20Election%20years.pdf
  2. https://thehill.com/homenews/campaign/4419421-vast-majority-voters-unenthusiastic-trump-biden-rematch/

These are the opinions of Legacy Wealth Management, LLC and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice. Copyright ©2024 Mike Berry. All Rights reserved. Commercial copying, duplication or reproduction is prohibited.