June 2020

In case you forgot, it’s an election year. It’s almost as if that is a distant past memory, but it’s not. I thought for sure all we would be talking about this year is the election, and quite frankly, I’m not really a political person. Don’t get me wrong, I am a voter, but I don’t care so much for discussing politics. People get so riled up and I guess that’s good that they are passionate, but sometimes it can go too far.

Seeming how it is an election year and we are all trying to think about something other than staying at home and the COVID-19, I wanted to share some facts about election years and how it relates to the markets. I found these interesting and I hope you do too.

First, according to a perspective I read from the Capital Group (they own the American Funds mutual fund company), if you look at election results back to 1932 (before I was born), “U.S. stocks have trended up regardless of whether a Republican or Democrat won the White House.”* It goes on to say that even “Investors who held on for at least a year were rewarded for their patience, thought they had to withstand heightened volatility during the primaries.”* In other words, stay invested and remember your long-term goals.

According to Kiplinger’s, since 1833, the Dow Jones Industrial Average has gained an average of 10.4% in the year before a presidential election, and nearly 6%, on average, in the election year. Well, last year the Dow Jones Industrial Average was up closer to 25%. This year we are down around 14% (as of May 26, 2020), so we will see how things pan out as the year continues.

Another interesting fact is that typically an incumbent president wins the election going back to Lyndon B Johnson in 1964. The exception is when there has been a recession within the two years prior to the election, as seen with Presidents Ford, Carter, and Bush (G.H.W). While we are in a recession now, there are many mixed feelings about who would be a better leader when looking at the coronavirus and the economy, Trump or Biden. A Wall Street Journal poll indicated that 47% of respondents felt that Biden would lead the country better when dealings with the Coronavirus, where 47% of respondents felt Trump would be a better leader to handle the economy.

I find these figures fascinating to read and here is what else I know: you have heard Cliff and I tell you many times, while the President has an important job and the administration can have an effect on the stock market, the President is just one of 100 different things that influences the markets. As we have witnessed this year, a virus has greatly influenced the stock market in ways we couldn’t have imagined.

We all have different political views and that is good. What makes us a great country is that we have the opportunity to choose our leaders. Please, do your research and be sure to vote!

*Source: Capital Group, Outlook 2020. US Stocks refers to the S&P 500 Index average cumulative returns from 1/1/1932 – 11/30/2019.

Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.