Conventional wisdom is that Republicans are good for markets because they tend to be pro-business and for lower taxes while Democratic presidents are bad for the markets because they usually favor higher regulations and government spending, which can crimp economic growth. While in theory this make sense, the stock market returns do not reflect this belief. I am not saying Democratic presidents are better than Republicans for the stock market but there is little correlation about the direction of the markets based upon who wins in November. Note that since 1932, only one president had a negative return during their entire term.
The timing and occurrence of many exogenous events that happen during a presidential term have a greater impact on the direction of the markets and are mostly out of the hands of the President. The low-return “death of equities” period of the 1970s followed by the expansion of credit from the Ronald Reagan/George Bush years led to incredible gains during their terms. The Bill Clinton presidency began right as major technological advancements such as the internet and email were born. George W. Bush had to deal with the tech bubble bursting followed by the September 11th terrorist attacks at the onset of his presidency. Barack Obama had the benefit of entering office after one of the largest drawdowns in the stock markets history as the Great Financial Crisis was ending.
This does not mean presidents cannot influence economic policy but the impact it has on the markets is not as much as people think. Presidents are in office for only four-year terms which is a very short period. They need to be able to work with Congress to enact economic, social, and environmental reforms, some of which get done but in a way that appeases both parties.
Lastly, using your political beliefs to make investment decisions is not a good combination because there is almost no correlation between the two - the stock market does not care about your political beliefs. Remember that the greatest investor of all-time, Warren Buffett, has bought stocks regardless of whether a Republican or Democrat was in office.
You will hear doomsday predictions from both sides of the aisle in the coming months but remember that long-term, the stock market does not really care about them.
I hope you are staying safe and healthy. Thank you for reading.