You have successfully subscribed to the You can see the Presidential Cycle in the lower left panel on the chart below. Monthly data since 1789 (mix of S&P 500, Dow Jones Industrial Average, & Cowles Commission). A percentage value for helpfulness will display once a sufficient number of votes have been submitted. Virtual Assistant is Fidelity’s automated natural language search engine to help you find information on the Fidelity.com site. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Please enter a valid last name. Presidential elections and stock market returns . Ultimately, it's the long wave of economic fundamentals that drives the markets beyond any one election or any one party.Get a weekly email of our pros' current thinking about financial markets, investing strategies, and personal finance. The information herein is general in nature and should not be considered legal or tax advice. Note that since the party system was not "Republican vs. Democrat" in the early days, the various occurrences do not add up to the total number of elections since 1789.What's interesting to note is that whatever the differences are in outcomes over the first 2 years following a presidential election (and there are many), they have all but disappeared by the time a full 4-year term has taken place.For instance, on average over the 2-year period, the market does better following a Republican win (+8.3%) than a Democrat win (+5.8%), but over a full 4-year term the average difference virtually disappears and we are left with +8.6% vs. +8.8% for Republican presidencies and all presidencies respectively.The contrast is even more extreme when there is a sweep. Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917 The "Presidential Cycle," as it is known, shows a consistent pattern in which the first 2 years of a presidential term have tended to produce below-average returns while the last 2 years have been well above-average. Fidelity does not assume any duty to update any of the information.Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk.Fidelity does not provide legal or tax advice. Bill Clinton. Ronald Reagan's first term in 1980 produced a 2-year return of −2% as the double-dip recession of 1980 and 1982 was still finding its bottom. Information that you input is not stored or reviewed for any purpose other than to provide search results. name@fidelity.com. Email is required. e.g. Fidelity does not guarantee accuracy of results or suitability of information provided.Fidelity does not provide legal or tax advice, and the information provided is general in nature and should not be considered legal or tax advice. This gooses the economy and creates a big rally that, presumably, is intended to ensure re-election of the incumbent party (or at least that's the goal).The market's lackluster performance in 2018 followed by strong gains in 2019 certainly fits this pattern, with bulls hoping that 2020 could be more of the same. But again, after 4 years the difference in average returns is almost gone (+8.6% vs. +8.2%).We also see a difference between the various gridlock scenarios. The current price of the Dow Jones Industrial Average as of July 2020 is Backlinks from other websites are the lifeblood of our site and a primary source of new traffic.If you use our chart images on your site or blog, we ask that you provide attribution via a link back to this page.
"But during the last 2 years, the party in power tends to be more inclined to focus its attention on getting re-elected, or so goes the general thinking. e.g. This information is intended to be educational and is not tailored to the investment needs of any specific investor.Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Email address must be 5 characters at minimum. Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. Please enter a valid first name. Doe. When the Republicans sweep, the 2-year average forward return is +12.2% and when the Democrats sweep it is a mere +3.4%. We have provided a few examples below that you can copy and paste to your site:Your image export is now complete. This interactive chart shows the running percentage gain in the Dow Jones Industrial Average by Presidential term. Plus, the mid-term elections tend to equalize any lopsided returns over the first 2 years.It's a good reminder that while it is sometimes suggested that a particular president or party is "good" or "bad" for the stock market, ultimately, it's these long-term fundamentals that matter.
What Stock-Market Investors Should Know About Presidential Cycles The strong market in 2019 is what’s expected in the third year of any president’s term, says Jeffrey Hirsch of Stock …
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