July 10

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Ol’ Joe’s Stock Market

We are home from our family vacation. The household has been sleeping for a day and a half. During the trip, we celebrated Grandpa and Yaya's 54th wedding anniversary! He met her during the Vietnam War while in Thailand. It took several years to get her over to the States to marry her. Little did they know that 54 years later, they would have four kids and thirteen grandkids. All by themselves, they filled up a vacation house with 24 people. Amazing!

My daughter had her 18th birthday party, and Aunt Molly splurged on an ice cream truck. Little Emmanual turned seven. All he wanted was a mountain of donuts with a candle on top.

The trip wasn't without its drama. One morning we awoke to a copperhead snake on the stairs. There was a lot of high-pitched shrieking (and some of it was me).

Below is Senay on the jet ski.


What’s the hot topic of the day? The election, of course. It’s drowning out everything else. So, do you need to worry about the stock market? Should you sell your positions until the presidential election mess gets out of the way?

There has been a lot of academic research on Democratic vs. Republican administrations regarding the stock market. Their conclusion? Whoever wins presidential elections has little bearing on the markets (if any at all).

You may be thinking, Dave, you are delusional. This election is unlike anything in history. There is no way you can compare 2024 to any other year.

Really?

Franklin D. Roosevelt's health was a significant issue in the 1944 election. His frail appearance during some of his public appearances raised questions about his ability to serve another term. The country was in turmoil over the situation. Oh, by the way, this was during a World War!

From 1944-1954, the stock market had a historic bull run.

And what about the 1960's? Politicians and social activists were being assassinated. The markets survived just fine.

I can go back to the 1800s and discuss the lore of gun duels in the streets, barroom brawls, and homicides. Over the past 200 crazy years, elections have not correlated with market returns. Stocks have averaged 10% since 1800.

You must accept this fact: The stock market is unknowable and illogical. Just because something seems ready to happen doesn’t mean a darn thing. (How did the stock market go up during a global pandemic?!)

Let’s get back to the presidential election fears. No matter which side of the aisle you fall on, this is the cold, hard data.

Ronald Reagan (with total market return during a four-year term)

1st term +30%

2nd term +67%



George H. W. Bush

1st term +51%



Bill Clinton

1st term +79%

2nd term +73%



George W. Bush

1st term -12%

2nd term -31%



Barack Obama

1st term +85%

2nd term +53%



Donald Trump

1st term +47%


Joe Biden

1st term (to date) +47.75


Random note: Can you believe how much the stock market grows? That’s incredible.

You need to remember that presidents inherit economies. If the economy is doing crummy right before they become president, it is not necessarily fair to judge them. For example, there is nothing George Bush could have done about a huge internet/technology bubble or a real estate crash- both years in the making.

You also need to remember that politics and business do not coexist. Technological innovation can overcome any political administration.

"Presidents get far too much credit, and far too much blame, for the health of the U.S. economy and the state of the financial markets," says Capital Group economist Darrell Spence. "Many other variables determine economic growth and market returns and, frankly, presidents have very little influence over them."

USA Today says, "Since 1952, the Dow Jones Industrial Average has climbed 10.1% on average during election years.."

Hmmm…I feel like I've mentioned that number before.

Don't sell stocks after a debate and don't buy them when your candidate wins. Go focus on something more meaningful. Like orchids. Or pickleball.

Be Blessed,

Dave

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