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Presidential Elections & The Stock Market: Is There a Correlation? Thumbnail

Presidential Elections & The Stock Market: Is There a Correlation?

Sex, lies and accusations of corruption - no election year is complete without them. And while the 2020 election has proven to be one of the most contentious in recent history, contention is nothing new in the world of politics. From the political match-up of Jefferson v. Adams to this year’s Biden v. Trump, mud has always been slung, accusations have always been made and many Americans have found themselves uncertain of a future under new (or unchanged) leadership.

While Adams and Jefferson didn’t shy away from printed ads and public debates, there’s something vastly different about today’s political climate - 24/7 access to constituents. Social media, email blasts, phone calls, television ads, radio announcements - today’s candidates and their associated parties have the ability to inundate Americans with their messaging.

Pair this with the fact that 2020 has been anything but ordinary (which, of course, no one needs reminded of), and you have an election year truly like no other.

A Reminder About Emotionally Driven Investing

Whether you’ve been guilty of it yourself or you’ve seen others take part, social media channels like Twitter and Facebook make it all too easy to share damaging, misguided or opinionated messaging. This is true in any instance, but it can be especially effective when these posts are about political candidates.

The problem is, being inundated day in and day out with information about our country’s political future (especially information that’s alarming or scary) can take its toll on anyone watching or listening. You’ve already heard the predictions - “If Biden wins, the stock market is sure to tank.” Or, “If Trump wins, the stock market is sure to tank.” People everywhere (whether they’re journalists or your Aunt Sally) are making an argument for it either way.

As an investor, it’s important to make a conscious effort to drown out the noise, think about your personal financial goals and keep in regular contact with your investment advisor. He or she can offer the educated, unbiased advice you need to stay on track and unswayed when it comes to preparing your portfolio for any potential changes in political leadership.

Historical Stock Market Performance During Election Years

Of course, past performance is no guarantee or indicator of future performance. But as an investor, it may interest you to see how the stock market has performed historically during and after presidential elections years. Below we’ve charted out the S&P 500 returns since the 2000 election:1  

Election Year 
Presidential Candidates  
Performance During Election Year  
Performance For Following Year  
2000 
Bush v. Gore 
-9.10% 
-11.89% 
2004 
Bush v. Kerry 
+10.88%
+4.91% 
2008 

Obama v. McCain

-37.0% 
+26.46% 
2012 
Obama v. Romney 
+16.0% 
+15.06% 
2016 
Trump v. Clinton 
+11.96% 
+21.83% 


Additionally, below shows the S&P 500’s percentage of return during a president’s full term dating back to 1981. This information was gathered from YCharts and presented by Forbes:2

President  
Years 
S&P 500 Return 
Donald J. Trump (R) 
2017-
+43% 
Barack H. Obama (D)
2009-2017 
+182% 
George W. Bush (R)
2001-2009 
-40% 
Bill J. Clinton (D) 
1993-2001 
+210% 
George H.W. Bush (R) 
1989-1993 
+51% 
Ronald W. Reagan (R) 
1981-1989 
+117% 


Historically speaking, there have been a number of outside factors that determine the stock market’s performance - more so than simply which party is in power. These other factors could include whether or not we’re in a bull or bear market, the business cycle, civil unrest (at home and overseas), trade wars, tax policy changes and more.

If the upcoming election has you worried about the future of your portfolio, take some time now to speak with your investment advisor or financial planner. They may be able to provide important insights into whether or not your asset allocation should be readjusted and review any contingency plans you may have already put in place.

Click here to schedule a call with a BWC advisor today.


  1. https://ycharts.com/indicators/sp_500_total_return_annual
  2. https://www.forbes.com/sites/sergeiklebnikov/2020/07/23/historical-stock-market-returns-under-every-us-president/#2046fd9efaaf

The information presented in this article is obtained from or based on sources believed to be reliable. BWC does not represent or warrant its accuracy or completeness and is not responsible for losses or damages arising out of errors, omissions or changes or from the use of information presented in this article. The article does not purport to contain all the information that an interested party may desire and, in fact, provides only a limited view. Information presented does not constitute an offer to sell or a solicitation of an offer to buy any security.

All investments involve risk, including loss of principal invested. Past Performance does not guarantee future performance. Individual client accounts and performance vary. BWC does not provide tax advice.

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