Jul 19, 2024 Presidential Elections and the Market
From 1961 to 2023, a $10,000 initial investment in the S&P 500 would have grown to over $102,000 if invested only when a Republican was in the White House. Conversely, the same investment would have grown to more than $500,000 if invested only during Democratic presidencies. While this might suggest a strategy of investing under Democratic presidents and staying out under Republicans, it’s crucial to consider the broader context. Historical data shows that the stock market has generally performed well over the long term, regardless of which party controls the White House. Numerous factors, including economic conditions and global events, significantly influence market performance beyond presidential policies. Therefore, a balanced, long-term investment approach is typically more beneficial than attempting to time the market based on political cycles.
However, the real moral of the story is revealed with the final comparison. The same $10,000 initially invested in 1961 would have grown to more than $5.1 million by simply staying invested, without regard for the political party in power. While presidential elections can significantly influence public policy, they should not dictate your investment decisions. It is essential to remember that we don’t invest in presidents or governments but in corporations that are constantly adapting to the political and economic environment. Staying the course and maintaining a long-term perspective is often the most effective strategy for achieving substantial growth in your investments.
Source: Schwab Research
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2024 3rd Quarter Investment Commentary