According to the web search results, the stock market has been favorable overall in 20 of the 24 election years from 1928 to 2020, only showing negative returns four times¹. However, the S&P 500’s average annual return in election years (7%) is lower than its average annual return in a typical year (10%)². There are also other factors that influence the stock market during election years, such as the state of the economy, the policies of the candidates, and the global events³.
One possible explanation for the lower returns in election years is that investors tend to be more cautious and uncertain about the future direction of the country and the economy. Therefore, they may reduce their exposure to risky assets and wait for more clarity after the election⁴. However, this is not a reliable pattern, as some election years have seen strong returns, such as 1996, 2004, and 2012, while others have seen steep losses, such as 2000, 2008, and 2020¹.
The bottom line is that the stock market performance during election years is not predictable and depends on many factors that are beyond the control of the investors. Therefore, it is advisable to focus on the long-term trends and goals, rather than trying to time the market based on the election cycle⁴. I hope this helps. 😊
Source: Conversation with Bing, 1/2/2024
(1) Stock Market Performance in Presidential Election Years – The Balance. https://www.thebalancemoney.com/presidential-elections-and-stock-market-returns-2388526.
(2) Election 2024: How Stocks Perform in Election Years. https://money.usnews.com/investing/articles/election-2024-how-stocks-perform-in-election-years.
(3) How Do Elections Affect The Stock Market? – Forbes Advisor. https://www.forbes.com/advisor/investing/how-do-elections-affect-the-stock-market/.
(4) Election 2020: How does the stock market perform in an election year?. https://www.usatoday.com/story/money/2019/11/05/election-2020-how-does-stock-market-perform-election-year/4165271002/.
Details
Derived by Co-Pilot (GPT4)