A data driven view into partisan politics
In 2024, citizens worldwide will head to the polls, shaping the course of their nations. National elections are slated to occur in countries representing 40% of the global population.[1] The decisions made by these elected officials can hold significant sway over our daily lives, often resulting in laws that directly impact us.
With such high stakes, it is no wonder that national elections stir powerful emotions in many of us. However, emotions and investing rarely make for a harmonious mix. So, let’s momentarily set aside emotional partisan politics and let the data speak to some of the most common investing questions in an election year.
Are Election Years Bad for Markets?
Not really but let’s dig a bit deeper. Since 1926, the average annual return during an election year is about 11.5%.[2] Interestingly, 84% of the time the S&P has posted a positive return in general election years.2 If we stopped here, we would call that a pretty good year. However, when compared to non-election years, the S&P returned 12.4% on average, but only 70% of those years were positive. 2 A modest argument could be made in both the “good” or “bad” camp. Statistically speaking, they are very similar. Importantly, making a market prediction based on the four-year election cycle alone is akin to Punxsutawney Phil’s shadow-based weather forecast. It is not particularly robust.
