With the 2024 Presidential elections looming, there has been increasing interest in how stocks have performed in the year following the election.
In this video we’ll examine how stocks have performed since the 1920 elections. During this104 year period, there have been 26 Presidential Elections. In the year follow these elections the stock market has gone up on 17 of those post-election years or 65% of the time. And down in 9 of those post election years or 35% of the time. The average return has been about 12%. The mean return has been about 15%.
These figures suggest that while the market's performance can vary significantly, there is a tendency toward positive returns in the year following an election. This trend reflects the market's general optimism about new administrations and their potential to implement policies that drive economic growth.
The stock market's performance in the year following U.S. presidential elections is influenced by a complex interplay of political, economic, and global factors. While historical data shows a general trend towards positive returns, the variability highlights the importance of considering broader economic conditions and specific policies enacted by the new administration.
Investors should be aware of these dynamics when making investment decisions around election periods. Understanding these historical patterns can provide valuable context for anticipating future market behavior, but it is essential to remain adaptable to the unique circumstances that each election cycle presents.
The stock market's behavior in the year following presidential elections can be segmented into broader historical trends. In the early part of the 20th century, the market experienced significant fluctuations, largely influenced by post-war adjustments and the onset of the Great Depression. The Roaring Twenties brought economic prosperity that was abruptly halted by the stock market crash of 1929, which led to widespread economic hardship. The implementation of New Deal policies during the subsequent decade helped to stabilize the market and restore investor confidence.
During the mid-20th century, wartime production and post-war recovery played pivotal roles in shaping market performance. The economic expansion that followed World War II contributed to strong market gains, reflecting the optimism and growth of the era. The post-war boom, however, was periodically interrupted by economic recessions and political uncertainties, which resulted in mixed market performances.
The latter half of the 20th century saw significant shifts in market behavior as a result of various economic policies and global events. The 1960s were marked by robust economic growth and market optimism, though this was tempered by the economic and political challenges of the Vietnam War and the oil crisis of the 1970s. These events led to periods of market decline and volatility, underscoring the market's sensitivity to geopolitical factors and economic disruptions.
The 1980s and 1990s were characterized by economic recovery and technological advancements that spurred significant market growth. The bull markets of this period reflected the positive impact of deregulation, tax policies, and the burgeoning tech industry. However, the dot-com bubble burst in the early 2000s, leading to a period of market adjustment and decline. The financial crisis of 2008 further tested the market's resilience, but subsequent recovery efforts and fiscal policies helped to restore stability and drive substantial gains.
In recent years, the market has continued to respond to a complex mix of economic policies, global events, and technological advancements. The COVID-19 pandemic posed a unique challenge, initially causing market turbulence but eventually leading to a strong recovery as fiscal stimulus measures and economic reopening efforts took effect.
The 2024 election is occurring during one of the most toxic periods in US history. What the market performance will be in 2025, is anyone’s guess.
The information contained in this Higgins Capital communication is provided for information purposes and is not a solicitation or offer to buy or sell any securities or related financial instruments in any jurisdiction. Past performance does not guarantee future results.