Breaking news: 2024 is an election year! Just the word “election” brings a varying level of anxiety, depending on the individual, not to mention the heightened tension that typically comes by adding terms like Biden/Trump, Republican/Democrat, CNN/Fox News, etc. In any election year, Clay and I receive questions about how the election and the potential outcomes could affect “the market.” Perhaps the best answer I can come up with is “it will fluctuate,” which happens to be the same answer J.P. Morgan gave 125 years ago to a reporter when asked “What will the stock market do?” I was reminded of this J.P. Morgan story recently when reading Keller Quarterly, a quarterly letter to investors written by Mark Keller, CEO and Chief Investment Officer for Confluence Investment Management. Election year or not, the market will always fluctuate, and it is important to recognize the opportunities that fluctuation can provide as an investor.
If someone claims to know what the market will do in this election year, it is likely they are selling you something to capitalize on your fear or greed (capitalizing on fear and greed is an entirely separate blog post or series of blog posts for a future date). No one really knows if the market will go up if certain election results occur or if the market will go down if the opposite election results transpire. That said, below is a chart from a recent Strategas Washington Research Team publication, and I believe the facts contained in this chart tell a compelling story.
In 14 of the last 16 (and 13 consecutive) election years where the incumbent president is on the ballot, “the market” (aka. S&P 500 index) has been positive. In half of the election years represented, a Republican was seeking re-election, while in the other half the incumbent was a Democrat. In some of the election years represented, the US economy was heading into a recession, while in others the US economy was coming out of a recession. High interest rates/low interest rates, low inflation/high inflation, war time/peace time; these things are important, but as it pertains to market performance, much of what is heard and read during an election year is simply noise. No matter how difficult it may be, the most successful investors are those that can block out the noise, remain disciplined, and take advantage of time in the market.
The "From Left Field" Double Play:
The presidential race we would rather see
Election years can feel like...
