Politics & Your Portfolio
With the U.S. presidential election now just a couple of months away, political noise is at an all-time high. Every TV commercial, podcast, and social media feed seems to be saturated with political content. As your financial advisors, we want to remind you of something important: politics matter far less to your long-term investment returns than you might think.
History is clear on this point. Going back to 1928, the U.S. stock market has generated positive returns under both Democratic and Republican presidents. Looking at the data:
- The S&P 500 has averaged roughly 11% annualized returns under Democratic presidents since 1928.
- The S&P 500 has averaged roughly 7% annualized returns under Republican presidents since 1928.
- But here's the kicker: the market has been positive in the year following a presidential election 17 out of 17 times since 1928, regardless of which party won.
The bottom line is that no matter who wins in November, the U.S. economy is likely to keep growing and the stock market is likely to keep rewarding patient, disciplined investors. The best thing you can do for your portfolio is to ignore the political noise and stay focused on your long-term plan.
Market Outlook
Beyond election year jitters, the broader economic backdrop remains constructive. Inflation is approaching the Fed's 2% target, the labor market is healthy, and corporate earnings continue to grow. The biggest risk to this outlook is that the Fed waits too long to cut interest rates, tipping the economy into a recession. However, with rate cuts now expected to begin in September, that risk appears to be diminishing.
As always, we'll continue to monitor the situation and adjust portfolios as needed. If you have any questions or concerns, please don't hesitate to reach out.