We’re all a little tense about Election Day tomorrow and what surely will be an all-out legal brawl to see who occupies the White House next.
But I wanted to offer some insight not from a political perspective but by looking at the economy. Specifically, I wanted to turn the spotlight on our stock market during election year cycles.
First off, do stock markets typically rise or fall during election years?
From 1928 to 2019, the average S&P 500 return was 11.57%. And during election years during that same period (except up to 2016), the annual average return is 12.76% – a small +1.19% bump.
Now, let’s look at the individual S & P 500 stock market gains and losses for election years:
1928 43.81% Hoover vs. Smith
1932 -8.64% Roosevelt vs. Hoover
1936 31.94% Roosevelt vs. Landon
1940 -10.67% Roosevelt vs. Willkie
1944 19.03% Roosevelt vs. Dewey
1948 5.70% Truman vs. Dewey
1952 18.15% Eisenhower vs.Stevenson
1956 7.44% Eisenhower vs.Stevenson
1960 0.34% Kennedy vs. Nixon
1964 16.42% Johnson vs. Goldwater
1968 10.81% Nixon vs. Humphrey
1972 18.76% Nixon vs. McGovern
1976 23.83% Carter vs. Ford
1980 31.74% Reagan vs. Carter
1984 6.15% Reagan vs. Mondale
1988 16.54% Bush vs. Dukakis
1992 7.49% Clinton vs. Bush
1996 22.68% Clinton vs. Dole
2000 -9.03% Bush vs. Gore
2004 10.74% Bush vs. Kerry
2008 -36.55% Obama vs. McCain
2012 15.89% Obama vs. Romney
2016 11.77% Trump vs. Clinton
2020 ? Trump vs. Biden
As you can see, the S&P 500’s performance swings wildly with no real pattern.
It is notable that when Obama ran for the first time in 2008, the S&P fell more than 36% that year, an all-time low for election years.
But by the time he ran again in 2012, that metric was up almost 16%.
So, you may be wondering if a Republican or Democratic president is better for the stock market?
In reality, whether a President was Red or Blue didn’t make a huge impact on the stock market, and the S&P 500 has flourished (or stumbled) under both Republicans and Democrats.
This may not put your fears at ease, but we can never have enough accurate information.
That being said, I hope each and every one of you are planning to get out and vote tomorrow!
Founder and President,
Matthews Financial & Insurance Solutions