News and Trends

Although presidential elections certainly capture national attention, their long-term impact on investors can be overstated. Yes, policies have important impact on businesses and individuals. However, an analysis of stock market returns during different presidential administrations reveals no clear and consistent trend. Historical data suggests, instead, that returns are far more closely correlated with broader economic cycles than with which political party occupies the White House. Markets have demonstrated the ability to generate positive returns regardless of the party in control, underscoring the importance for investors to focus on fundamental economic factors rather than politics.

Election-year news makes great headlines, but investors should assess myriad data points. Presidential elections are one “blip” among topics including consumer debt and spending, wage growth, consumer loan default rates, inflation, unemployment, housing, federal deficit spending, international events and many other economic indicators requiring careful consideration. It is the culmination of these data points that ultimately drives economic cycles … yet another reminder to investors of the importance of diversification and allocating portfolios consistent with long-term goals.