Happy Election Day!

I don’t know about you, but I still like to vote in person. I’ve worked the polls a couple of times and think in-person voting is just more fun. Granted, Election Day this year is even more politically charged than usual and we have the pandemic to think about. Showing up to vote in 2020 requires a sense of adventure and a healthy dose of patience. Also, our daughter recently turned 18 and my wife and I are taking her with us to vote. Exciting times indeed.

This week let’s keep things light and peek into that age-old question about which party is better for markets, Republicans or Democrats. This is one of those highly subjective questions where it can be easy to find information that fits your hypothesis instead of the other way round. Historical and economic context is important, and so is a variety of other detail that goes into a more robust answer to the question. Understanding all that, let’s simply look at the numbers.

My research partners at Bespoke Investment Group published a quick piece back in February looking at returns of the Dow Jones Industrial Average, a major US stock index, during presidential administrations going back to 1900. A quick note: while the data below is pre-Covid, the total return for the Trump Administration is currently still about 48% since Inauguration Day.

Beyond the numbers, however, remember that it’s important to think beyond politics when it comes to investing. Presidents don’t control the stock market and one administration is often the beneficiary (sometimes lucky, sometimes not) of work done by its predecessor. You’re investing over a long period of time, over multiple administrations, and a good goal is to be an all-weather investor. In other words, historical numbers like those below are interesting information for a cocktail party, but you wouldn’t want to make investment decisions based on it.

Continue reading…

… In the table below, we show the performance of the Dow during the administrations of every US president since 1900 in addition to the annualized return. In the time since President Trump was sworn into office, the Dow has risen 46.9%. On an annualized basis, the 13.3% return places the current administration in 3rd place for the strongest performance. Only the Clinton administration in the 1990s and Coolidge administration in the 1920s have observed stronger annualized gains. The one caveat of course is that President Trump’s term (or terms) has yet to end. Comparing Democratic and Republican administrations since 1900, Democratic presidencies have tended to average stronger returns than their Republican peers, so the stock market’s returns under President Trump have deviated somewhat from the norm.

Have questions? Ask me. I can help.

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