Looking at the past won’t provide investors with simple answers to the question of whether the presidential election will bring about a positive or negative period for the stock market.
The S&P 500 was up more over 42% in 2020, a year after President Joe Biden took office, according to Morningstar Direct data that was given to CNBC.(Morningstar examined the returns for those 24 U.S. presidential elections in the six and twelve months after Election Day.)
In the 12 months following Jimmy Carter’s victory over former Republican President Gerald Ford, the index dropped by about 6%. It had a comparable decline in the year after Dwight Eisenhower’s second victory.
At the same time, the S&P 500 was up 0.6% a year after Ronald Reagan was elected president. The index had increased by almost 19% twelve months following Reagan’s reelection.
Jude Boudreaux, a certified financial planner and partner at The Planning Center in New Orleans, stated that there is no clear and observable pattern in the way markets perform following presidential elections.
Election years aren’t all that different from stock market years, said to Boudreaux, a CNBC FA Council member.
To put it another way, market moves are equally unpredictable.
In light of President-elect Donald Trump’s victory, Boudreaux stated that he is not suggesting any significant adjustments for his clients.
Morningstar Investment Management’s global chief investment officer, Dan Kemp, offered investors similar counsel.
According to a statement from Kemp, investors may look for stories that forecast the future when they are faced with uncertainty and adjust their portfolios accordingly.
However, he stated that following through on one’s plan is the most crucial thing an investor can do.
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