In nine months, the U.S. stock market (S&P 500 Index) has plunged 35%, rebounded 60%, and followed that up with another 10% drop. A slight rally at the end of September leaves the market with a gain of 5.5% year-to-date.
Bonds experienced a sharp drop during the madness of March, but quickly recovered and are showing modest gains for the year. Foreign stocks plunged along with the U.S., but emerging markets have since clawed their way back to even while developed markets remain down slightly.
Whew… can we call it a year already? 😯
Unfortunately, 2020 has more in store for us, including an upcoming election.
What does that mean for investments, particularly the stock market?
Does the presidential election matter for stocks?
There are plenty of factors to consider in a presidential election, but are investments one of them? Should concerns over market performance enter into the equation?
Conventional wisdom says that Republicans are more business friendly, in which case a Republican president would seemingly benefit stocks. Yet, that popular belief isn’t supported by the data.
First, it’s worth noting that stocks are rising more often than not. Statistically, stocks rise in about 75% of one-year periods. The odds of positive returns increase for longer timeframes, with around 88% of 5-year periods showing gains. So, it shouldn’t be surprising that most four- or eight-year timeframes for presidential administrations would have positive stock returns, regardless of political party.