The US presidential election is just a few weeks away. And as usual, large swathes of participants in the US stock market are trying to predict the victor because they think it will have significant consequences on how US stocks perform. I don’t have a crystal ball. But I do have history’s verdict, thanks to excellent research from the US-based wealth management firm, Ritholtz Wealth Management, that I came across recently.
Here’s a table showing the annualised returns of the S&P 500 for each US President, going back to Theodore Roosevelt’s first term in 1901:
I think the key takeaway from the table is that how the US stock market performs does not depend on what political party the US President belongs to. Republican presidents have presided over bad episodes for US stocks (Herbert Hoover, Richard Nixon, and George W. Bush, for example) as well as fantastic times (Calvin Coolidge, Dwight Eisenhower, and Ronald Reagan, for example). The same goes for Democrat presidents, who have led the country through both poor stock market returns (Woodrow Wilson and Franklin Roosevelt, for example) as well as great gains (Franklin Roosevelt, Lyndon Johnson, and Barack Obama, for example). Presidents do not have that much power over the financial markets. Don’t let politics influence your investing decision-making.
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