Do Stocks Care About Who The President Is Like We Do? Here's What The Data Says

As the presidential election looms, many Americans are weighing how their vote might impact their financial future. Should investors be concerned about how election outcomes might influence the stock market?

Conventional wisdom might suggest that the occupant of the Oval Office wields influence over market performance, as presidential policies can reshape industries, alter trade relationships, and impact consumer spending. 

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But a deeper dive into historical data reveals a more nuanced picture, according to Ryan Detrick, chief market strategist at the Carson Group.

Detrick’s analysis of decades of stock market performance under various administrations reveals a pattern, he told CNBC Make It. Had an investor put $1,000 into the broad U.S. stock market in 1953 and only kept it invested during Republican presidencies, they’d have just under $30,000 today. The same strategy, but only investing under Democrats, would yield about $60,000.

However, staying invested throughout that entire period, regardless of who occupied the Oval Office, would have resulted in $1.7 million.

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“A lot of people didn’t like President Obama. A lot of people didn’t like President Donald Trump. A lot of people don’t like President Biden. The stock market did just fine under all three of them,” Detrick told CNBC.

That long-term perspective points to something important: the market tends to trend upward over time, regardless of which party controls the White House.

In fact, the broad U.S. stock market has seen gains in 17 out of the 20 four-year administrations since Eisenhower took office, the CNBC report noted.

But if partisan control does matter, where should investors look? Interestingly, gridlock in Washington might be a bullish signal. “What’s going to matter more [than the Presidential election] is the makeup of Congress,” Detrick notes. “When you have a divided Congress, that tends to be the best thing.”\

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Experts, including Detrick, caution against making investment decisions based solely on political outcomes. Nick Murray, a financial advisor, reported election-related anxiety among investors before the 2020 election. In his newsletter, Murray advised, “Take your political convictions completely out of your investment decision making … There is zero basis, in fact, for this conviction.”

The 2016 election serves as a reminder of what happens when trying to predict market reactions to political events. As Donald Trump’s unexpected victory became clear on election night, futures plummeted. Yet by the market close the following day, the S&P 500 had risen more than 1%, defying predictions, Murray noted.

While historical trends can provide context—like increased market volatility in the months before elections—they don’t predict future performance.

Ultimately, Detrick said broader economic factors matter more than political outcomes. “The bottom line is that politics are fun to watch. They matter, and they should matter to people. But when it comes to your investments, how the economy is doing is what matters,” he said to CNBC.

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