Market Trends in Re-Election Years: A Look at What History Tells Us
Capital Investment Advisors
Helping Families Find Happiness in Retirement | Retirement Planning | Income-Oriented Investment Portfolios
The votes are in, and Americans have voted Donald Trump as the next President of the United States of America. The stock market surged post-election day. The Dow Jones Industrial Average rose 1,503 points, or 3.6%; the S&P 500 gained 146 points, or 2.5%, and the tech-heavy Nasdaq Composite increased nearly 3%.? Throughout this election season, we've repeatedly emphasized that markets favor certainty, and when the presidential election results brought clarity with a decisive winner, the markets responded positively.
Presidential re-election years are historically better for the stock market than open presidential elections. In fact, the S&P 500’s average return going back to 1960 is 13% better in presidential re-election years compared to open presidential elections. The previous 13 presidential re-election years have seen positive returns from the stock market. The last time the stock market fell in a re-election year was 1940.??
Now that the election is over, what does that mean for the stock market and your investments? While we don’t have a crystal ball, we can look to history as a guide.? The following table shows how the S&P 500 (total return) has performed three, six, and twelve-months after U.S. presidential elections going back to 1972. As you can see below the average returns have been quite healthy during the time periods. While this election season might not have felt average, we hope the market will follow the average historical trends over the next year.?
Quick Links:
?
Try Our Newest Tool
Try out our newest tool, the Happy Retirement Planner, and see how your lifestyle and finances line up on your retirement journey. It’s a simple way to spot areas that might need a little adjustment so you can confidently move towards a happier, more fulfilling retirement.
5 Reasons The American Dream Is Still Alive And Well
?
Only 36% of Americans now believe in the attainability of the American Dream, according to a 2023 Wall Street Journal/NORC survey. This number has dropped significantly from 53% in 2012 and 48% in 2016, suggesting a growing pessimism about the future.
Why? The constant flow of negative news—political turmoil, natural disasters, and foreign conflicts—certainly contributes to this bleak outlook. For investors, this can raise doubts about domestic investments and the stability of American companies. Yet, despite these challenges, America’s core strengths remain resilient and may provide reassurance to those working toward a prosperous retirement. American author Robert Bryce highlights five pillars of American excellence that continue to support the country’s long-term stability.?
Education
The U.S. remains a global leader in higher education, boasting 58 of the world’s top 100 universities. These institutions foster breakthrough innovations in AI, biotech, and telecommunications. The U.S. also leads in Nobel Prizes, keeping the nation at the forefront of global technology and industry.
Demographics
Unlike aging nations like Japan and China, the U.S. is projected to grow from 337 million to 404 million people by 2060. This growth, supported by immigration, ensures a steady supply of workers, consumers, and innovators, helping sustain the economy and workforce.
Geography & Agriculture
America’s fertile land and abundant water resources make it the world’s top food exporter, providing both economic stability and food security. Efficient transport networks, including 2.4 million miles of waterways, allow for easy movement of goods, especially valuable exports like corn, in which the U.S. produces nearly 40% of the global supply.
?Energy
Energy independence is a key U.S. advantage. In 2018, the U.S. became the world’s largest oil producer and remains a leader in natural gas and nuclear energy. This abundance ensures lower domestic energy prices, a competitive edge for industries, and energy security that strengthens national stability.
The Constitution
The Constitution underpins America’s freedoms and entrepreneurial spirit. By balancing power among federal, state, and local levels, the U.S. supports a thriving small business sector, which represents 99.9% of companies and employs nearly half of private-sector workers. This decentralized structure fuels economic resilience and innovation.?
Bottom Line
Retiring comfortably in America is not without its hurdles. Economic uncertainty, political tensions, and social divisions may make the future seem daunting. However, America's resilience and productivity remain strong. By investing in the country's enduring strengths, future retirees can find optimism, stability, and a renewed sense of the American Dream.?
A Quick Reminder
This is provided as a resource for informational purposes and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. The mention of any company is provided for informational purposes and as an example only and is not to be considered investment advice or recommendation or an endorsement of any particular company. All investments involve risks, including possible loss of principal. An Advisor’s judgment about markets, interest rates or the attractiveness, relative values, liquidity, or potential appreciation of particular investments is important to the portfolio accomplishing its goals. The portfolio could experience losses if these judgments prove to be incorrect. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. For stocks paying dividends, dividends are not guaranteed, and can increase, decrease or be totally eliminated without notice. Fixed-income securities involve interest rate, credit, inflation, and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed-income securities falls. Global investing can involve additional risks, such as the risk of currency fluctuations. Diversification can reduce (but not eliminate) the risk of loss. There is no guarantee offered that investment return, yield, or performance will be achieved. There are many aspects and criteria that must be examined and considered before investing. This information is not intended to, and should not, form a primary basis for any investment decision. Always consult your own legal, tax, or investment adviser before making any investment/tax/estate/financial planning considerations or decisions. Investment decisions should not be made solely based on information contained herein. The S&P 500 Index is a market capitalization-weighted index based on the results of approximately 500 widely held common stocks. Please note an investor cannot invest directly in any index. Performance results are for informational purposes only, moreover, index performance does not reflect the deduction of advisory fees, transaction charges, and other expenses. Past performance is not indicative of future results.