How Have Presidential Elections Historically Impacted the Market?

February 08, 2023

How have presidential elections historically impacted the market? Paul L. Moffat, President and Senior Financial Planner at Arista Wealth Management, explains in the newest episode of Arista Advice!

Full Transcript:

Hello, welcome to Arista Advice! Question of the week is: "Paul, what does history tell us about the US presidential elections and the market?" Well first, let me say this, the best thing you can do is to go on a TV news fast. We have had a few clients, just a handful, call in the last one to two months, all wound up about the political consternation that's going on always in the United States and throughout the world. Give yourself some room and give your heart and your blood pressure a break, and stop reading all the political news. It's built to be negative, and it's built to dispense negative news, so why read it?

But let's look at history and decades of data to help us. It's natural for investors to look for a connection between who wins the White House and which way stocks will go. But as nearly a century of returns show, stocks have trended upward, and let me say that again, upward across all administrations, either Democrat or Republican or a mixed House, a mixed Senate and a mixed White House. You'll see on this graph, whether it's Republican or Democrat and whoever the President was down below that the markets continue to advance and the economy continues to advance and move forward. Shareholders are invested in companies, not a political party, and companies focus on serving their customers and growing their businesses, regardless of who is in the White House. And final, US presidents may have an impact on market returns, but so do hundreds, if not thousands, of other factors. The actions of foreign leaders, a global pandemic, interest rate changes, rising and falling oil prices, and technological advances, just to name a few, are always out there. 

So stay invested. Stay invested with your long-term plan. The market always returns to the long-term investor of those who stay the course. So don't let inflation, politics, recession get inside of your portfolio. Remember to go to to get other tools, tips, videos, and resources to help you live a life of significance.