The Presidential Election’s Impact on Stocks

Market returns vary by presidential party in power, but no clear and consistent trend emerges.

Despite the perceived importance of this election, and presidential elections are important but can distract investors financially. policy changes also tend to be gradual due to checks and balances in our political system. What candidates promise on the campaign trail can differ from what they can actually enact.

When it comes to taxes, neither candidate is proposing a return to pre-Reagan era tax levels when the top marginal rates reached as high as 94%. When it comes to trade, tariffs may increase but they are unlikely to reach the levels experienced almost a century ago during the Great Depression. It’s important to keep these facts in perspective when planning for the next four years.

The bottom line? The election matters for many reasons, but its long-term impact on the stock market and economy is often overestimated. The economy has grown under Democrats and Republicans alike, and it’s important for investors to maintain perspective this election season.