THE BREW – JANUARY 2024
SAVE THE DATE
SEIA INVESTMENT ROUNDTABLE
DATE? Feburary 22, 2024
TIME? 1:00pm – 2:00pm PST
Join us for our quarterly Investment Roundtable webinar, featuring Deron McCoy, Chief Investment Officer at SEIA, and April Rosenberry, Director of Estate, Tax, and Financial Planning at SEIA. In this session, we will delve into the most recent developments in estate planning, tax strategies, and investment trends for 2024, with a forward-looking perspective during an election year.
Topics on the agenda include:
S&P 500 RETURNS BY PRESIDENTIAL PARTY
It’s an election year and primary season is getting underway. Between now and November 4th (election day), investors will likely ponder how politics may impact their investments. It’s a murky and often polarizing topic, but one we think warrants some historical analysis to help keep investors level-headed during this election year.
Politicians love to tout the returns of the stock market while they’re in office, but they rarely (if ever) attribute those returns to factors outside of their control. Since 1950, the stock market has risen with both Republicans and Democrats in the white house.
The chart above shows the S&P 500 in red (Republicans) or blue (Democrats) depending on which party occupied the oval office. We also include recessions (grey). Republicans have been on the wrong side of economic cycles, with 9 of the last 10 recessions starting when Republicans held office.
While that statistic suggests that Democrats have a better track record of managing the economy, we’d assert that fortuitous timing likely played a big part. For example, four Republican presidents (Eisenhower, Nixon, Reagan, W. Bush) had to contend with recessions in the first year of their presidencies. In each instance, the seeds of an economic downturn were sown long before they took office. Additionally, the 2020 recession was a by-product of the COVID pandemic, but it did occur during Trump’s presidency.
However, if we average the performance of the S&P 500 during the first term of Democrats and Republicans, we find that the S&P has risen more with Democrats in office (62% vs 39.6%).
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While the difference is notable, the annualized return while Republicans are in office still a respectable 8.7% per year (vs. 12.8% for Democrats).
Another factor to consider is the state of the economy when each president took office. Since 1953, the unemployment rate has averaged 5.8%, much higher than the 3.7% we enjoy today.
Looking back at inauguration months, Republicans took office with an average unemployment rate of 4.6%, vs. 7.2% for Democrats. This suggests that, on average, Democrats came into office earlier in economic cycles, leaving a longer runway for stocks to rise during their presidency.
Over a long enough period, investors have been rewarded regardless of which party is in office. Financial markets are far more sensitive to economic cycles than the party affiliation of the president.
Investors shouldn’t allow political narratives to drive their investment decisions. Instead, an ongoing careful assessment of economic and market conditions is needed to navigate the ever-changing investment landscape.
Talk to you SEIA Advisor; we’re here to help.
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Signature Estate & Investment Advisors, LLC (SEIA) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Securities offered through Signature Estate Securities, Inc. member FINRA/SIPC . Investment advisory services offered through SEIA, LLC, 2121 Avenue of the Stars, Suite 1600, Los Angeles, CA 90067, (310) 712-2323. For details on the professional designations displayed herein, including descriptions, minimum requirements, and ongoing education requirements, please visit seia.com/disclosures. SEIA does not accept time-sensitive, action‐oriented messages or transaction orders, including orders to purchase or sell securities, via electronic mail.