I once heard a definition on a podcast that the stock market is a gauge of rich people’s feelings. Hyperbolic, but cute. 

My experience as a financial advisor has shown that the gauge of people’s feelings — be they rich or not — about the stock market’s performance is politics. 

I’ve been emailed to “SELL EVERYTHING” the night former President Trump stunned the  world and got elected, had others who refused to invest much in stocks because former President Obama was in office, and heard another regretfully admit that they moved entirely out of stocks under the current administration of President Biden. 

Historically, such predictive reactions, if translated into actual investment decisions, would not only have been inaccurate but also significantly hindered wealth accumulation. 

The stock market doesn’t care about your politics.  

Consider the following scenarios of investors with different political persuasions under the last three administrations: 

Let’s say in the midst of the financial crisis of 2008-2009 and right before Barack Obama’s election, you were 100% invested in the Dow Jones Industrial Average but pulled all of your  money out because you were convinced that his liberal policies would damage the stock  market. Over his two terms, you would have missed a total return of 149.4%.¹

On the other hand, if you were on the left or simply a Never-Trumper and had been 100% invested in the S&P 500 index, but concerned with his character and policies, you sold everything when Donald Trump was unexpectedly elected, you would have missed an  increase of 69.6% over the next four years.²

What if you had stopped investing in the S&P 500 upon Joe Biden’s inauguration because  you believed what Trump said during the 2020 debate that experts predicted the market  would crash if his opponent was elected? According to YCharts as of September 23rd, 2024, you would have missed a total return of 57.10%.³

Lest we be biased over the short term, let’s zoom out even farther. 

Your primary concern as an investor should not be the President’s political influence on the  stock market, but rather the power of compound interest over the long term. According to Bespoke Investment Group research, historical data shows that investing across  administrations—Eisenhower (R), Kennedy (D), Johnson (D), Nixon (R), Ford (R), Carter (D),  Reagan (R), H.W. Bush (R), Clinton (D), W. Bush (R), Obama (D), Trump (R), and Biden (D)— significantly outperformed investing under only one party.⁴

If you had invested $1,000 in the S&P 500 since Eisenhower’s inauguration only during  Republican presidencies, you’d have $27,400; while if you had done the same in the same time frame under Democratic presidencies, it would be worth $52,100. Before Democrats  start gloating over their Republican friends (different party participants can still be friends, right?), there’s a significant twist. 

If you had invested across all presidencies, the portfolio would be worth $1,430,000. 

This might be worth remembering as we all get caught up in the coming election fervor. I have no idea how the stock market will perform if Donald Trump or Kamala Harris wins in November, and it might be best to avoid financial advisors and pundits who claim they do. What I have observed, however, is that investing in American companies through both ups  and downs has far exceeded partisan investing. 

By about a million dollars, in fact. 

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Sources: 

  1. Date from Investopedia, “Where Was the Dow Jones When Obama Took Office?” published July 16, 2023.  
  2. Data from Investopedia, “President’s and their Impact on the Stock Market” updated  September 16, 2024. 
  3. Data via YCharts on September 23rd, 2024. 
  4. See chart from @bespokeinvest X account posted September 6, 2023. The rest of  the data in the article comes from there. 

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Brandon Stockman has been a Wealth Advisor licensed with the Series 7 and 66 since the  Great Financial Crisis of 2008. He has the privilege of helping manage accounts throughout  the United States and works in the Fortuna, CA office of Johnson Wealth Management which manages over $100,000,000 of assets under management. You can sign up for his  weekly newsletter on investing and financial education or subscribe to his YouTube channel. Securities and advisory services offered through Prospera Financial Services, Inc. | Member FINRA, SIPC. This should not be considered tax, legal, or investment advice. Past  performance is no guarantee of future results.