How is the stock market affected under a Democratic vs Republican President?

I don’t talk much about politics on this page, but a couple times I’ve dipped my toe in (i.e. to debunk the “your 401ks will crash” Trump tweet). I got a few comments saying something like “sTaY oUt oF pOliTiCs!!!11” and of course I respond to them with “When you stop posting about your mahjong club, I’ll stop posting about politics!” and they say, “but I like my mahjong club!” and I say, “well, honestly I do too, but just don’t like when you tell me what to post.”‎

Anyway, the point is that despite the very heated rhetoric and the tribal warfare mentality of politics at the moment, the stock market really doesn’t care who is sitting in the Oval Office.‎

This data is based on a Vanguard study that looked at the difference in return by political party of the president. According an economist with Vanguard, “This difference is statistically insignificant and time-period-dependent… It offers little to no value in the context of an investment strategy.”‎

Another interesting finding is that the total return during election years (40 different years) was 8.9% compared to 8.0% during non-election years. While interesting, this difference is also insignificant and not to be used to predict future returns.‎

Anyway, ignore those who say “zomg the market is totally going to crash under ____ but ____ is amazing for the market.” It’s not true. A million things impact the returns of the thousands of publicly traded companies in the US stock market, not to mention global stock market. The relatively minor policy changes any president might enact are way down the list.‎

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎


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