The mood for the upcoming 2024 election can best be described as "dread"...
According to a recent Gallup poll, 6 in 10 Americans disapprove of President Joe Biden's performance. No incumbent has had a lower approval rating going into a reelection campaign since Dwight D. Eisenhower.
But Donald Trump is just as unpopular. Pew Research Center reports that 6 in 10 Americans view the former president negatively, too.
It's clear most Americans have a serious distaste for one or both candidates. That's a recipe for a brutal presidential race. So it's easy to assume this volatile political backdrop will spill over into the stock market.
But according to history, a presidential election – even an especially heated one – won't stop the current bull market...
Election Day is the biggest day in the political calendar. It decides the next four years of policy in the U.S...
But in terms of the stock market, it's more or less just another day. History shows election days don't make much difference to stocks.
To see this, I ran an "election simulator" to find how the S&P 500 Index performed on average in the first few weeks after an election.
The U.S. holds elections on the first Tuesday after a Monday in November. (That means if November starts on a Tuesday, polls won't open until the following week.)
Using this system, I tracked "election days" in nonelection years going back to 1950. Then, I found how stocks performed on average in the five weeks following these theoretical "election days."
Finally, I repeated this process during actual election years for comparison... And I found that stocks don't care whether folks are going to the polls or not. Take a look...
On average, stocks tend to rise through November. And they typically do so regardless of an election year...
Since 1950, we've had 18 years with elections and 56 years without. Stocks rose an average of 1.88% in the five weeks following a presidential election. That compares with a 2.37% increase during a nonelection year.
In other words, elections move the market less than half of a percentage point. History shows they simply don't cause much market volatility in the weeks that follow.
It's a contentious time in American politics. You may dislike one of the candidates in this year's election. Heck, you may even hate them...
But if that candidate wins, don't expect it to hamper the current bull run. Short-term political events don't dictate how stocks perform.
Rather than hedging your stock market bets against one candidate, stick to your investment strategy. Stocks should continue to perform well... regardless of who wins.
Good investing,
Sean Michael Cummings
Further Reading
Elections don't breed as much market volatility as people think. In fact, election years have proven to be reliably bullish periods for stocks. And history shows you should stay long regardless of the results... Learn more here.
"Investors can come up with any number of reasons to sell today," Brett Eversole writes. Yet stocks have kept climbing higher. It's better to harness the uptrend instead of fighting it – and you don't need to be an advanced market technician to do it... Read more here.
HIGHS AND LOWS
NEW HIGHS OF NOTE LAST WEEK
Bank of America (BAC)... financial giant
Brown & Brown (BRO)... insurance
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Microsoft (MSFT)... tech giant
Nvidia (NVDA)... chip giant
Texas Instruments (TXN)... semiconductors
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Moderna (MRNA)... pharmaceuticals
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Johnson Controls (JCI)... industrial equipment
Trane Technologies (TT)... HVAC manufacturer
Motorola Solutions (MSI)... telecom
Suncor Energy (SU)... oil and gas
NEW LOWS OF NOTE LAST WEEK
Bristol-Myers Squibb (BMY)... pharmaceuticals
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