How Will the 2024 Presidential Election Affect Your Pocketbook?

BY JIM MONIZ MSFS & KATE LEONARD PSY.D., NORTHEAST WEALTH MANAGEMENT 

How will the 2024 election affect the stock market? 

This is a question that many investors and individuals are asking themselves. The anxiety and stress surrounding presidential elections have been on the rise in recent years, with political hostilities and increasing party divides playing a significant role. The uncertainty of not knowing how an election will unfold can be overwhelming and exhausting, especially when it comes to our finances and market trends. 

However, history shows that most election years see positive returns in the stock market. Over the last century, 82% of presidential elections have resulted in positive market returns, while only 18% have had negative results. This indicates that the stock market tends to perform well during election years, regardless of the party in power. Furthermore, the third year of a presidential term is often associated with the strongest market performance. About 91% of the time, year three in a presidency has seen positive market returns. This can be attributed to the progress made during the early years, such as newly written legislation being passed, and a president’s focus on reelection and campaign strategy.

When it comes to party affiliation, average returns tend to be higher with Republican electees. S&P returns are generally lower with a Democrat elected to the presidency. It is worth noting that market stability often depends on checks and balances, with neither party having complete control over the presidency and Congress. This provides a sense of stability and prevents short-term volatility.

Despite the political passions and parties involved, the U.S. economy has consistently grown over the last century, regardless of whether a Republican or Democrat is in the White House. This growth has made the U.S. economy the largest in the world, showcasing the resilience and strength of the American economy. 

It is essential to remember that there are no certainties or absolutes when it comes to elections or the markets. A range of factors, such as inflation, recessions, conflicts abroad, and domestic unrest, can influence market activity and election outcomes. While trends and forecasting can be helpful, it is crucial to understand that nothing is set in stone until it happens. 

As individuals, our choices and actions matter, both in elections and in the markets. It is essential to stay informed, make educated decisions, and have a long-term perspective when it comes to investing. By focusing on our financial goals and staying resilient during uncertain times, we can navigate the potential impacts of the 2024 election on the stock market and our portfolios. 

In conclusion, while it is natural to feel anxious and concerned about the effects of the 2024 election on the stock market, historical trends suggest that positive market returns are likely. To discuss the impact an election year can have on your financial planning, please do not hesitate to reach out to us.