Broker Check

Mistakes Investors Make During Election Years

April 16, 2024

Does who is sitting in the White House influence markets? According to Kezia Samuel, Deputy Chief Investment Strategist with AssetMark, it may. Still, there are many other factors, such as the actions of foreign leaders, interest rate changes, changing oil prices, and technological advances, to name a few.

History suggests that election years are a nonissue for the markets. Since the creation of the S&P 500, there have been 24 election years. During that time, there have been 13 democratic and 11 republican presidents. According to Forbes, the S&P 500's average return during election years is about the same as non-election years—although slightly positive more often—and positive returns were seen more frequently in election versus non-election years. So, if anything, history tells us that election years could see markets produce favorable returns.

What are some common mistakes investors make during election years?
    1. Basing investment decisions on election results.
    2. Letting pre-election market turbulence determine investments.
    3. Trying to time the markets.

These mistakes are related to the fear and uncertainty an election year can bring. But based on history, investors should continue to stay the course!

To help explain election year market history, the factors influencing the market, and election year investment strategy, watch this Video