Investing in an Election Year

Presidential Elections and Equity Market Performance

Presidential election years can be stressful for investors. We are inundated with commentators making dire prognostications for the economy and investment markets. Meanwhile, presidential candidates and their campaigns tend to focus on the country’s problems and the social media ecosystem amplifies the resulting cacophony. It is easy to feel pessimistic given this negativity, and investors may allow the gloomy environment to affect their decision making. But history tells us that, despite the noise and the anxiety it may produce, presidential election years have not been particularly risky for investors relative to any other year.

Even with the clamor surrounding elections, markets tend to efficiently process all available information and use it to set asset prices in election years just as they do in other years. If we examine the history of market performance during election years, we find that presidential elections have not led to particularly bad outcomes for markets. While markets tend to dislike uncertainty, after elections are over, regardless of the outcome, at least some amount of uncertainty has been removed from investor calculations.

Hypothetical Growth of $1 Invested in the S&P 500 Index 1928-2024

Average S&P 500 returns
Presidential Election Years11.0%
All Years (1928-2023)11.5%
Source: Bloomberg data; Hypothetical growth examples are for informational and educational purposes only. Past performance does not indicate future results.  All investments carry a degree of risk including the loss of principal. Index performance does not reflect fees or expenses that investors typically pay to buy or sell securities.  It is not possible to invest directly in an index

U.S. equity markets have tended to go up over time without regard for the party that controls the White House. And despite the outsized attention paid to election results, the historical record doesn’t reveal any apparent pattern in the performance of U.S. equity markets in election years. From 1928 through 2023, the S&P 500 averaged an annual return of 11.5%. In presidential election years, the S&P 500 averaged only slightly less, 11.0%.

Since 1928, there have been four presidential election years with negative returns in the S&P 500. Each of those years were punctuated by events that likely overwhelmed any impact made by the presidential election or its results.

Presidential Election Years and Negative S&P 500 Performance
YearS&P 500 PerformanceMitigating Factor
2008-37.0%Global Financial Crisis
2000-9.1%Tech Bubble bursting
1940-9.6%World War II
1932-14.8%Great Depression

The negative returns in 1932 occurred amid the Great Depression. In 1940, the effects of the Great Depression still lingered, and World War II was already well underway in Europe and in Asia. The year 2000 featured the bursting of the Tech Bubble, followed by a recession in early 2001. In 2008, the Global Financial Crisis jolted markets. The most recent presidential election year, 2020, featured the emergence of the COVID-19 pandemic and an ensuing recession, yet the S&P 500 returned 18.4%. So even in a hotly contested election year marred by major global events that negatively affected the economy, the U.S equity market was able to produce positive returns.

While investors can’t control the outcome of an election, the noise surrounding it, or the market’s reactions, they should focus on things that are within their control.

  • Avoid making rash decisions based upon the emotions of the moment.
  • Review your investment plan and confirm that it is appropriate for your risk tolerance and financial objectives.
  • Maintain perspective and discipline around your long-term financial plan.
  • Take advantage of opportunities to rebalance your portfolio and/or engage in tax-loss selling.

In our view, investing during times of stress is less about making the perfect decision at the perfect time and more about avoiding significant errors. Investors who can maintain their perspective despite the noise may be better positioned to think clearly and make sound long-term decisions.

The S&P 500 is an index consisting of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large-cap universe. Each constituent in an index is weighted by its market-capitalization, as determined by multiplying its price by the number of shares outstanding after float adjustment. The price return of an index is a measure of the cap-weighted price movement of each constituent within the index.

Different types of investments involve degrees of risk, including the potential loss of principal and varying fees and expenses. The future performance of any investment or wealth management strategy, including those recommended by us, may not be profitable or suitable or prove successful. Past performance is not indicative of future results.


Greg Bone

Greg Bone


Greg is a Partner, Investments Leader in our Dallas office. He joined legacy firm RGT team in 2002. All told, he has more than 20 years of experience in portfolio management and investment research. Greg previously served as a portfolio manager at H.D. Vest and has considerable experience in both graduate and postgraduate economic research.

Greg received his Bachelor of Arts in Economics from Hendrix College and holds a master’s in economics from Southern Methodist University. He holds the Chartered Financial Analyst® designation.


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