October 1, 2020
You may feel very strongly about who will occupy The White House for the next four years, but when it comes to your investments and portfolio returns, history has shown it hasn’t mattered nearly as much as we’d think. As we enter the final quarter of 2020, the Presidential election looms in our future. We’ve had many questions about the election and what to expect in the stock market, and would like to focus our final newsletter of 2020 on providing you with information and perspective to help shape decisions regarding your investments and financial well-being
Since 1944, there have been 13 different Presidents, some Republican, some Democrat. S&P 500 returns over those 76 years have averaged 12.6% annually. Both Democrats and Republicans have seen positive market returns, with the greatest discrepancy coming when Congress is unified under one party and the White House held by the other.
| Political Scenario | S&P 500 | Total Returns | Years |
|
Unified Government* |
|
14.9% |
30 |
|
|
Democratic President |
14.5% |
22 |
|
|
Republican President |
16.1% |
8 |
|
Unified Congress+ |
|
10.8% |
32 |
|
|
Dem. President/Rep. Congress |
15.9% |
10 |
|
|
Rep. President/Dem. Congress |
8.5% |
22 |
|
Split Congress^ |
|
12.1% |
14 |
|
|
Democratic President |
16.0% |
4 |
|
|
Republican President |
9.9% |
10 |
|
All Years |
|
12.6% |
76 |
Source: CFRA Research, Forbes.com
See below for explanation of various scenarios
What does it all mean? With any investment, previous returns and performance are no guarantee of future results. The same can be said with an election, especially one happening amidst a worldwide pandemic. The reality is that when the election is over and the President chosen, markets will react either positively or negatively. Our lives will continue, we’ll face challenges, and our lives will move onward. No recession or depression has ever been caused based on the results of an election.
Great, I’m still worried – what can I do? We’ve said this before and will likely say it again, but the best strategy in any scenario like this is to own quality investments with a plan in place to help dictate decisions based on your current needs, goals, and expectations. We witnessed this scenario when markets dropped significantly earlier this year in March and April. Markets will rise and fall based on news and current events – but over the course of time, patience and plan has proven the most fruitful strategy.
POINTS OF INTEREST
- Stock Market Holidays: Markets will be closed in observance of the following holidays in the coming months.
o November 26 – Thanksgiving
o December 25 – Christmas Day
- As a reminder, if you would like to make a request to have funds sent to you from an investment account, please call to make this request. For security purposes we cannot issue funds via e-mail, only by speaking in person or over the phone.
* Unified Government: President, Senate, & House of Representatives all controlled by same party
+ Unified Congress: President from one party, Senate & House of Representatives controlled by same party
^ Split Congress: President from one party, Senate & House of Representatives controlled by different parties.