Don’t Mix Politics with your Portfolio
Clients may remember that we ran the table below last May under the heading of “Do the Odds Favor Stock Investors?” The table stacks up all the years since 1945 when the market returned a particular range of results. Adding 2023 made the record even better–61 years out of 78 were up.
This year we highlight in yellow the 19 election years since 1945. It turns out that election years are even better with 17 positive years and only 2 negative. Why would that be?
In many years, much of the positive returns are concentrated in the last two or three months of the year. That’s especially true of election years. Typically the uncertainty of an election creates a bumpy few months through October. Then, once the market knows who won, it can get back to tracking companies, not politicians. A year-end rally following major elections is normal.
But this is far from a normal year. Donald Trump, if he wins, will be the first president to win a non-consecutive second term since Grover Cleveland in 1892. Questions about Biden’s health continue to arise. And a majority of voters would prefer someone aside from two major candidates.
People are grumpy and to repeat, we’re entering the bumpy summer of a typical election year.
Beyond the possible turbulence of the summer, we need to remember that corporate profits are rising and the market is off to a very good start for the year. Toss in the AI boom and 2024 is likely to be a good year for stocks. The table above suggests the odds still favor stock investors.
Best regards,
Daniel A. Ogden
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