As we reflect on the highlights from last night's presidential debate, many investors are expressing concerns about how the election outcome could impact their retirement accounts. While elections hold significant weight in many areas of life, their direct influence on long-term investment success tends to be overestimated. One key takeaway from market history is that the stock market has a remarkable ability to adapt and thrive, regardless of which political party is in power. Whether a Republican or a Democrat holds the presidency, historical data consistently shows that the market continues its upward trend over time. For instance, the S&P 500 has delivered positive returns during the majority of presidential terms, a clear indication that the market factors in political changes and maintains its bullish momentum.

Inevitably, during election years, we receive calls from worried clients fearing that a certain party’s victory might necessitate selling all their stocks. Our perspective is that while presidential policies certainly influence specific sectors, the broader market is driven by fundamental economic factors such as corporate earnings and interest rates. America’s leading corporations can navigate policy changes and grow regardless of which party controls the White House.

Here is a chart of what your returns would look like if you were in cash during a Republican or Democratic Presidency versus staying with the S&P 500 in all years. The results are profound.

While presidential elections are important civic events with potential implications for specific sectors and policies, they are not the primary drivers of long-term investment success. By focusing on economic fundamentals, maintaining a diversified portfolio, and avoiding emotional reactions to political events, investors can navigate the market with confidence and achieve their financial goals.

At Runnymede Capital Management, we're here to help guide you through the complexities of the market—during election years and beyond.

Charts from Goldman Sachs

Feature image generated with AI