Trump vs Biden: Stock Market Performance Should Remain Steady Regardless of Winner of November’s Presidential Election
Bethesda, MD – October 19, 2020 – Regardless of whether Trump or Biden are victorious, stock market performance should remain steady following November’s historical presidential election, according to research conducted by award-winning investment firm Rebalance.
Rebalance reviewed more than 100 years of financial data to understand the impact of presidential elections on the stock market (1960-2016) as well as stock market returns under different ruling political parties (1860-2010).
Impact of Presidential Elections on the Stock Market (1960-2016)
During the last 23 presidential election years and each subsequent year, the stock market was down four times during an election year and down 10 times the year after an election. The down-market years were mostly recession years having nothing to do with the election. The average return during election years over this period was + 11.3%, and it was + 9.9% in the years subsequent to the election.
Stock Market Returns Under Different Running Political Parties (1860-2010)
Stock market returns under different ruling political parties from 1860 to 2010 show annual returns of 8.2% per year for Republican presidents and 8.4% per year for Democratic presidents, based on a 60% equity, 40% fixed-income portfolio. The annualized compounded return is minimal between the two parties.
“History clearly shows us that stock markets generally behave positively during both presidential election years and subsequent years and that the market has maintained its upward trend over long periods of time regardless of who ends up in the White House,” stated Mitch Tuchman, Managing Director of Rebalance.
Tuchman continues, “The long-term average returns of a diversified portfolio of stocks and bonds is virtually the same during Republican and Democratic administrations and historically not significant for stock market performance. Any exceptions related to the party of a president are likely more related to economic conditions than politics.”
A review of the performance of markets going back to 1926 serves as a powerful reminder that stock markets go up the vast majority of the time and under many different administrations. As such, investors should develop a personal financial plan and “stay the course” regardless of which political party is currently in power in Washington.
Rebalance is a mission-driven, award-winning investment firm committed to offering premium, fiduciary wealth management services to everyday investors. The firm is at the forefront of providing consumers with a fundamentally different and better set of investment options: lower costs, endowment-quality globally diversified investment portfolios, and systematic rebalancing.
The Rebalance Investment Committee is anchored by three of the most respected experts in the finance world: Burt Malkiel, the world-renowned Senior Economist at Princeton University and author of “A Random Walk Down Wall Street”; Dr. Charley Ellis, the former longtime chairman of the Yale University Endowment; and Jay Vivian, the former Managing Director of IBM’s $100+ billion in retirement investment funds for more than 300,000 employees worldwide.
Rebalance is headquartered in Palo Alto, CA and Bethesda, MD and currently manages more than 600 clients with more than $750 million in financial assets. In 2018, Rebalance was honored by Schwab’s 2018 Pacesetter IMPACT Award™ for Innovation and Growth.