Video Transcript
Hi, I’m Jacob Winston, a Financial Advisor and Wealth Strategist with Winston Wealth Advisors. Today, I want to walk you through a couple of charts that shed light on how politics and presidential elections have historically had little effect on market performance, specifically when it comes to the broad S&P 500 Index.
In the first chart, we’ll look at how stocks have performed under Democrat versus Republican presidents. The data, which tracks the S&P 500’s annual average returns since 1933, shows an interesting comparison.
On the left side of your screen, you’ll see the first set of bars: blue for Democratic presidents and red for Republican presidents. The average annual return under Democratic presidents stands at 14.5%, while under Republican presidents, it’s slightly lower at 10.7%.
The takeaway? Historically, the market has performed well regardless of which party is in power.
It’s also important to keep in mind that new laws and policies typically take a long time to be fully implemented, and their economic impact can take years to manifest. This delay gives companies and investors ample time to adapt and find ways to benefit.
The chart on the right illustrates this point. It shows that the difference in market returns between a Republican or Democrat victory is almost negligible when you look at the one-year lagging returns attributed to each party. No matter how you slice it, the returns have been strong under both Democratic and Republican presidents.
Our final graph in this video highlights the remarkable growth of American stocks over the past 90 years. This chart shows the S&P 500’s returns from 1933 through the end of 2023. Similar to the previous chart, the blue and red colors indicate whether a Democrat or Republican was in office, with the president’s name displayed in black.
When you take this long-term view, it’s evident that stocks have generally trended upward. What really drives returns are economic cycles and technological advancements, not political parties. Companies find ways to thrive regardless of who’s setting the rules in Washington.
While these charts focus on the S&P 500, representing many of the largest U.S.-based companies, it’s important to remember that our clients have investment opportunities well beyond just large American corporations.
As financial advisors, we tailor our clients’ portfolios by diversifying across a mix of large and small companies, both domestic and international, along with bonds and other asset classes. Regardless of the economic environment, we remain strategic, consistently seeking opportunities while carefully managing risks.
History has shown us that sticking to a well-balanced and Diversified investment strategy and following your financial plan are far more important to your financial success than the outcomes of any election.
As always, feel free to reach out with any questions. We’re here to help.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may
