Curious about the market impact of this year’s upcoming elections?

Mike Walther breaks down the data findings and offers insights into what to expect as we head into 2024 in this video.

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With the majority of the presidential primaries scheduled in March and April we wanted to share some interesting research regarding the impact of the president’s political party on the performance of the investment markets.

But first, let’s start with a fun fact about this year’s election. If you want an interesting perspective on just how old the two presumptive presidential candidates are, add their two ages together and then subtract that number from the election year 2024. Yes, the result is 1866!  That is one year after the civil war ended. Let that sink in.

Now let’s use the 1860s as our starting point. Investment firm Vanguard, analyzed the performance of a simple diversified portfolio consisting of 60% stocks and 40% bonds. Comparing election years and non-election years, there is no significant difference in the returns that are earned by investors. In fact, contrary to the belief that election years will generate more volatility and lower returns for investors, the investment markets have tended to outperform in election years. To dispel this concept further, the market volatility, how much stocks move up and down, for the 100 days before and after the election date, is lower than during other times over the last 40 years. So what that tells us is that even though elections are coming, the markets don’t seem to care that much.

In fact, it’s reasonable to have concerns about the outcome of elections, but you should not worry that the outcome is going to negatively impact your investments. If you maintain your Perspective, Investment Discipline, and Investment Strategy, you will likely stay on track for reaching your financial goals, regardless of who wins the election. In fact, in election years, your investments may just deliver better investment performance than you expect.

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