Every two years, the entire House of Representatives is elected or reelected, as well as approximately one-third of the Senate. During each cycle, pundits always like to predict what will happen if one party or another takes control. While these predictions are always fun and interesting to read about, rarely, if ever, does the election actually impact the market. The markets are a representation of thousands of companies all over the world, and each company has a purpose to enhance profitability for the shareholders. A change in the political party has not shown any significant difference over time.
The chart below shows market returns when one party has had full control of Congress, versus divided/mixed control. The chart’s general assessment is that markets go up over time, regardless.
Of course, nothing is wrong with wanting your favorite candidate or party to win. However, making portfolio changes based on political winds has never worked, and more importantly, no difference is discernable between one party or another in terms of impacts on long term returns.
The silver lining for investors is that post mid-term elections, market returns tend to be very strong, regardless of congressional party control. The chart below shows equity market returns after an election since 1950. In the year after mid-terms, the average return has been over 15%, versus non-election years, when it’s around 7%.
As an investor, you may find the “experts” fun to listen to, but the data is clear that elections don’t impact equity markets as much as you might think. We suggest staying the course and investing based on your financial plan and goals, keeping in mind that elections come and go. As always, please let your Bluerock Team know if you have any questions.
Bluerock Wealth Management is registered with HighTower Advisors, LLC, an SEC registered investment adviser and/or Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through HighTower Advisors, LLC. Securities are offered through HighTower Securities, LLC.
This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors.
All data or other information referenced herein is from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other data or information contained in this presentation is provided as general market commentary and does not constitute investment advice. Bluerock Wealth Management, HighTower Advisors, LLC nor any of its affiliates make any representations or warranties express or implied as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. Bluerock Wealth Management and HighTower Advisors, LLC assume no liability for any action made or taken in reliance on or relating in any way to this information. The information is provided as of the date referenced in the document. Such data and other information are subject to change without notice. This document was created for informational purposes only; the opinions expressed herein are solely those of the author(s) and do not represent those of HighTower Advisors, LLC, or any of its affiliates.
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