What Does an Election Year Mean for Equity Investors?

November 22, 2019 | Jeffrey Hoffmeyer, CFA, Lead Analyst, Asset Allocation

Prior to each presidential election, there is inevitable talk about market reactions to candidates and how policy changes could impact investors. As shown in the table, election years tend to exhibit more muted returns (as measured by the S&P 500 index) and greater volatility compared to the years leading into the presidential election. Year-to-date, 2019 has continued the Year 3 trend of strong performance, but if history is any indication, the 2020 outlook is less optimistic.

When it comes to Republicans vs. Democrats, political pundits often try to show one is better than the other for equity market returns. The reality, however, is that there isn’t enough of a sample size to draw any meaningful conclusions about parties, given the number of combinations of who controls the Presidency, Senate, and House of Representatives. Even in the case of 2016 with Trump’s unexpected win, markets initially sold off but quickly rebounded to their previous levels. No matter the candidate or the policy, markets care most about clarity and dislike uncertainty. As a result, we are expecting greater volatility over the next 12 months as we head into the 2020 presidential election. While the election will certainly not be the sole driver of market volatility, it will undoubtedly contribute to further uncertainty over the coming months.

Print PDF > What Does an Election Year Mean for Equity Investors?

 

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Jeffrey Hoffmeyer, CFA
Lead Analyst, Asset Allocation

Get to Know Jeffrey

Related Content

12.12.2019

The Dynamic Duo vs. the Russell 2000

Apple and Microsoft are the two largest companies (by market value) in the United States and the only two U.S….

12.05.2019

Will the Good News Continue for U.S. Equities?

Domestic equity returns have surprised investors to the upside this year. The S&P 500 is up ~24% and the S&P…

11.15.2019

Should Investors Worry About the Growing Deficit?

Americans have seen tax cuts and strong historical returns across asset classes since the Global Financial Crisis. However, though the…

11.08.2019

Will Argentina’s New President Drive Losses for Hedge Funds?

When Argentina President Mauricio Macri was elected in 2015, he brought along a pro-business agenda, which reopened the country’s financial…

11.07.2019

Live Videos: 2019 Investment Symposium Presentations

The six flash talks by our research team at Marquette’s 2019 Investment Symposium on October 4th are…

11.07.2019

Luncheon Keynote with Mohamed El-Erian

Recorded Friday, October 4, 2019 — 2019 Investment Symposium Excerpts from Marquette’s…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >