What I learned after 12 months of talking about the election

“Elections don’t matter for markets as much as investors suspect that they do.” If I had a dollar for every time I said that in client meetings this year, I could fast-track my retirement plans (by a few weeks, at least). Fortuitously, the US stock market has advanced by a remarkably similar amount under President Biden as it had under President Trump, providing real-time credibility to my conviction. (1)

It’s not always easy taking the middle road in a politically divided country, not even when you have the data to prove your points. For example, did you know that the S&P 500 Index returned over 200% under President Reagan and President Obama? (2) While the audience often receives my neutral message well, there are moments when members will take out their political anxieties on me, the messenger. For every 10 comments telling me that I’ve eased their concerns, there is one comment insinuating that my head is in the proverbial sand — or somewhere worse.

I’ve heard it all this year (and have the thick skin to prove it). I’m told that I’m whistling past the graveyard as the nation hurtles towards stagflation or socialism or fascism or a debt spiral or economic collapse, or even World War III. Never mind that inflation, which only spiked because there was a pandemic, has since moderated. (3) Ignore that the US government, with its system of checks and balances, has never allowed for a radical re-engineering of the economy. Forget that the total net worth of US households is vastly bigger than the nation’s debt level. (4) Disregard that the US has been one of the most innovative economies in the world, across multiple administrations.

The optimism may sound na?ve, but the US stock market has historically rewarded the optimists. The S&P 500 Index has posted positive returns over 11 of the 13 presidential administrations since its origin in 1957. (5) The 10.5% annualized return over that time amounts to a doubling of the index within 6.8 years, or well before the culmination of two presidential terms. (6)

What matters most is that we are having these conversations. I’m proud to report that none of my client meetings ended in conflict. Rather, the discussions always concluded with the breaking of bread and the washing it down with the libations or our choice. Conversations quickly turned to our families, our hobbies, our sports teams, our careers, and our aspirations. You know, like Americans do.

So, before we binge watch the election results tonight, take it from someone who observes markets and travels this great country. One, markets have performed well under both parties. Two, don’t believe the media hype. We all have more in common than not, and we still enjoy each other’s company.??

1. Source: Bloomberg, 10/31/24. Based on the performance of the S&P 500 Index from election days November 2016 and 2020 through the next 1000 trading days (11/8/16 – 11/3/20, and 11/3/20 – 10/31/24).
2. Source: Bloomberg. Based on the returns of the S&P 500 Index under Reagan (1/21/81 – 1/21/89) and Obama (1/21/09 – 1/21/17)
3. Source: US Bureau of Labor Statistics, 9/30/24. Based on the US Consumer Price Index.
4. Source: US Census Bureau, 9/30/24.
5. Source: Bloomberg. Based on the returns of the S&P 500 Index.
6. Source: Bloomberg. Based on the returns of the S&P 500 Index.

Important information

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All investing involves risk, including the risk of loss.

Past performance does not guarantee future results.

Investments cannot be made directly in an index.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

The Consumer Price Index (CPI), which measures change in consumer prices, is a commonly cited measure of inflation.

Inflation is the rate at which the general price level for goods and services is increasing.

The S&P 500? Index is an unmanaged index considered representative of the US stock market.

Stagflation is an economic condition marked by a combination of slow economic growth and rising prices.

The opinions referenced above are those of the author as of Nov. 5, 2024. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties and assumptions; there can be no assurance that actual results will not differ materially from expectations.