What should you know?
2024 is a pivotal election year across the world. Over 50 countries, representing nearly half of the global population, and including some of the world’s largest economies, go to the polls.
India, Pakistan, Indonesia, Mexico, the UK, and France have already voted, with the US election still to come in November.
Focusing on the US, we can explore how elections and the subsequent leadership have historically influenced stock markets.
The chart below illustrates the performance of the S&P 500 during all presidential terms since 1933:
Why should you care?
Markets often experience volatility amid the uncertainty leading up to an election. However, evidence suggests this is a short-term phenomenon, with elections typically having minimal impact on stock market performance in the medium to long term.
As an investor, you are investing in companies, not a political party. Companies focus on serving their customers and growing their businesses in all economic and political environments, regardless of who is in power.
Market returns are generally more influenced by economic trends than election results. Ultimately, it is profitability that drives share prices.
Historically, stocks have rewarded disciplined investors across all presidencies. If you have a globally diversified portfolio, an upcoming election does not warrant any changes. Rather, long term investors will benefit greatly from remaining invested throughout all electoral cycles.
