Stocks have had a habit of gaining ground no matter who becomes President.
Regardless of which candidate emerges victorious, historically, investors have generally come out on top in the months following a presidential election.
The reason: Between Election Day and Inauguration Day, stocks generated positive returns 80% of the time, going back to 1984. The only two instances in which stock prices fell following the past ten elections occurred when the economy was experiencing extreme stress—in 2000, when the tech bubble burst, and in 2008, during the global financial crisis.
Remove those two recessionary periods, and we see that stocks were up 100% of the time from election to inauguration—positing a strong average return of 5.9% (see the chart).
S&P 500 Performance from Election Day to Inauguration Day (1984-2020)
Source: Bloomberg, calculations by Horizon Investments, data as of January 20, 2021. Indices are unmanaged and do not have fees or expense charges, both of which would lower returns. It is not possible to invest directly in an unmanaged index.
The upshot: If you’re unhappy with the election results, don’t let that disappointment cause you to make rash moves with your portfolio.
The S&P 500 or Standard & Poor’s 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. It is not possible to invest directly in an index. Information obtained from third-party sources is believed to be reliable but has not been vetted by the firm or its personnel.
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