Broker Check

Presidential Elections and Investing – Steady as She Goes

October 02, 2019

Every four years we Americans buy a ticket to the theater of a presidential election. And every four years, investors wonder how the political pageant will affect their portfolios. While ideological passions may surge and the pervasive, seemingly endless pounding of media coverage frays our senses, the markets flow on. It is often said that what markets and investors fear most is uncertainty. As another quadrennial November approaches no one can be entirely certain of the outcome.

And this election is unique, we are told, because so much is at stake – just like in every presidential election going back as long as I can remember. But the markets for stocks and bonds – the two broad asset categories that trade systematically in immense volume every business day – trade on. Sometimes likened to the circulatory system of free enterprise, these markets may surge and ebb at varying rates and frequencies in reaction to the news of the day, but they show no particularly different behavior leading up to or in the year following a presidential election. Historically in fact U.S. market movements do not seem to be influenced by national elections at all.

Consider this: about 120 million people on average, voted in each of the four presidential elections held this century.1 That’s a lot of people taking the same action on a Tuesday in November (or voting early) every fourth year. Meantime, there are about 2½ million transactions on the New York Stock Exchange (NYSE) every single day it’s open for business.2 Over the course of a year, that’s over 625 million individual investment decisions made by buyers and sellers of stock. And that’s every year – not every fourth year. In dollar terms, our presidential elections have sucked in and spewed out money on a rapidly rising scale in recent cycles. The 2012 election, establishing the 5th consecutive new all-time high, saw the Obama and Romney campaigns together spend over $1.2 billion.3 However, over three weeks this summer, about $28 trillion flowed through the NYSE every trading day! The NYSE isn’t the only market in town either. The National Association of Securities Dealers Automated Quote (NASDAQ) exchange by some measures is larger. And I haven’t even mentioned the roughly $30 trillion market in U.S. bonds. The point is, presidential elections may dominate the headlines, occupy our thoughts, stir our conversations, and test our patience every four years, but the investment markets hardly notice. Because the markets react to the aggregate decisions of millions of individuals millions of times a day, day in and day out. Like Ol’ Man River, markets just keep rollin’ along.

Indeed there are some number crunchers who will sift historical statistics to show how movements in the market predict electoral outcomes. There are some who point to the trend of market’s being a little flatter every four years than their century-long annual averages. The uncertainty that befalls investors too wrapped up in the see-saw of political campaigns may drive a barely perceptible flattening of the markets’ trajectory. But investors with a diversified portfolio of rationally selected bonds and stocks, a clear goal, and a patient timeline to pursue it, would do well to resist changing course over what any politician says when out performing for their next job. The investment markets in the U.S. are too large to be distracted by the side-show of White House campaigns. Our system of free enterprise and the willing exchange of assets between buyers and sellers that sustains it hasn’t changed course in any significant way while we vote to change Chief Executives. Presidential campaigns in scale and duration are like driftwood bumping up against the hull of a grand ship moving forward with the mighty current.4 For serious investors, it’s steady as she goes.

1 U.S. Census Bureau, Statistical Abstract of the U.S., 2012.
2NYSE Market Data,, Volume Summary, August 22 – Sep. 12, 2016.
3Federal Election Commission data reported at, August 2, 2015.