Staying the Course During Election Season

Election season has been in full swing for months now and is thankfully coming to a close.   If you’ve noticed a steady stream of predictions and theories about how the results will impact the market, you’re not alone. The media thrives on this speculation, but when it comes to the market’s long-term trajectory, history gives us a more grounded perspective.

Let’s Take a Look at Recent History

Think back to the 2016 election. Many believed a Trump presidency would send the economy into a tailspin. However, over those years, GDP grew from $19 trillion to $22 trillion, and the S&P 500 rose significantly—about 55% (excluding dividends) by the end of his term.

Similarly, in 2020, fears swirled that a Biden victory would mean economic decline. Yet, during Biden’s term, GDP continued to grow to around $29 trillion, and the S&P 500 surged by roughly 75%.

The lesson here isn’t about which candidate or party is “better” for the economy. The takeaway is this: the economy and stock market have shown resilience, finding their way forward regardless of the party in power.

Why Markets are More Resilient Than Political Drama

Markets are driven by the businesses and industries behind them—not by the political party in office. When we invest, our trust lies in the innovation, adaptability, and growth of these companies, led by some of the brightest minds. Their job is to navigate changing policies, no matter the political landscape, and grow their businesses accordingly.

What does this mean for us? Historically, the long-term trend has been positive for both the economy and the market, and it’s often best to avoid reacting emotionally to election headlines when making investment decisions.

A Time-Tested Approach: Staying the Course

While elections do shape policies, they don’t radically alter the economic direction as much as we might think. This resilience is evident in data going back decades, where both Republican and Democratic governments have had similar outcomes in terms of overall market growth.   Here is a link to a short summary if interested: 

Market Returns During Election Years - 2024.pdf

So, as this election season heats up, take heart in knowing that we’re invested in something far greater than temporary political drama. Our strategy is based on the long-term performance of solid, adaptable companies—companies that thrive no matter who occupies the White House.

The best thing we can do? Stay the course.