What will the market do once Election 2024 is over?
I can tell you — with 100% accuracy: The market will... go up and down. Or maybe down and up. And after that, there'll be "up" days and "down" days — through the end of the year. That general pattern will continue next year, the year after, and the years after that.
There — now you know!
Yes, election outcomes matter — probably in more ways than we know. But, when it comes to the U.S. stock market, the degree to which Republicans or Democrats control the levers of governmental power is only one factor (albeit a large one) among many others that influence the markets and the economy.
If history is any guide, the stock market — like ol' man river — will just keep rolling along, no matter who is in power.
A YCharts graphic illustrates this well (data starting in 1961 and going through mid-2024).
Click graphic to enlarge.
Many moving parts
It's difficult to find a pattern in the graphic above. Some years with a Democrat in the White House have been awful, as have some years with a Republican in the Oval Office. Presidents from both parties have enjoyed terrific years, too.
The markets are influenced by millions of things — literally — as millions of investors decide where to invest their money and for how long. At the same time, thousands of U.S. companies are growing, adapting, innovating, or perhaps failing. All of these things affect market performance in the U.S.
To be sure, a presidential administration's policies can help or hurt, but many things investors and businesses may deem positive or negative aren't in a president's control. These days, the Federal Reserve likely has more influence over market performance than any president.
Here's a graphic from Blackrock showing S&P 500 growth of a $1,000 investment made in late 1953 and continuing through the end of last year. Note the lines at the bottom showing how an investor would have fared if staying invested only during Democratic or Republican administrations.
It's a bit difficult to tell the particulars of "partisan" investing from those orange and yellow lines, but a Morningstar piece provides the dollar amounts.
Since 1953, $1,000 invested when a Democrat is president, sold to cash when a Republican takes office, and then reinvested when a Democrat returns turns into $62,000. The opposite strategy — only investing when a Republican sits in the Oval Office — only grows to $27,000.
That performance variance is largely related to the bull markets of the 1990s (Democrat Bill Clinton) and the 2010s (Democrat Barack Obama) and the two brutal bears of the early 2000s (Republican George W. Bush).
But no matter. The critical point is that 1953's original $1,000 investment would have grown to nearly $1.7 million(!) by the end of 2023 if an investor remained invested the entire time.
Not losing sleep
Don't misunderstand. I'm concerned about how this election might turn out — not only regarding the presidency (and all that comes with it) but also who will run the House and Senate. In my state (Kentucky), critical constitutional amendments are also on the ballot, too.
But I'm not losing sleep over how the stock market might perform. Regardless of election outcomes, the market will go up and down, down and up. There will be good years and bad. If past patterns continue to hold, the market's good years will yield far greater returns than the bad ones will take away.
Elections can have profound economic, cultural, and national security consequences. That's why I've been praying about these elections for many months, and I hope you have, too.
But come what may, ol' man market will likely just keep rolling along.
