Beyond Politics: Debunking Election Hype in Investment Decisions

With elections coming up in the US, and UK also, we will get an increasing amount of noise about how your investments might be affected by whichever party comes to power, and this can lead to investors making decisions based on fear that will damage their financial wealth.

The data shows that capturing long term returns of capital markets does not depend on which party is in control of the White House.

There is no clear pattern or evidence that helps us to conclude that if this party wins, then the market goes up. And when we look at returns under each party, there are so many more factors driving market returns than just who is in the White House, such as oil prices, interest rates, and how expensive the market is at the start of a presidency.

This is not to say that a president doesn’t have an impact on stockmarket prices and the economy, but there are 100’s if not 1000’s of factors that have an influence, and it is very hard to say that if X gets into power, then Y will happen to your investments.

The real conclusion from the above visual is that markets have rewarded long term investors under a variety of presidents, and the best thing you can do is to stay invested.