Buckle Up
Wednesday, September 11, 2024
Here we go again
After the latest debate, the U.S. presidential election cycle is in full swing. With less than 2 months before election day, the media coverage and barrage of political advertising will continue to ramp up. Narratives seeking to correlate the results of U.S. presidential elections and stock market performance often circulate in the runup to voting day. Historically, however, financial markets have generally fared well regardless of who happens to win (* as illustrated below).
Moreover, trying to adjust your investment strategy in the hopes of capitalizing on an anticipated post-election swing in the markets could end up backfiring. U.S. stocks have historically risen over the long-term, so it should come as little surprise that staying the course remains the favored approach.
What about market volatility around the election itself?
Looking at the average daily performance of the S&P 500 during the 13 elections since 1972 (** see below), we find that the 60 days before and after an election tend to be more volatile.
We remain mindful that the upcoming election, global geopolitical tensions and unforeseen events may produce elevated market volatility. As summer fades and we approach the fall, we expect greater clarity from the Fed on upcoming policy actions, creating a potential tailwind for fixed income assets with several paths for rate cuts. Anchoring your approach to thoughtful asset allocation and constructing diversified portfolios to enhance resilience are increasingly important as we prepare for the markets ahead.
As always, please reach out with any questions and we will do our best to address them expeditiously.
Disclosures
INVESTMENT AND INSURANCE PRODUCTS ARE | NOT FDIC Insured | NOT bank guaranteed | MAY lose value
Riverview Trust Company investments are not insured or guaranteed by the Bank, the Federal Deposit Insurance Corporation or any other government agency. Non-deposit products are subject to investment risks, including possible loss of principal. Past performance does not indicate future results. Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment losses.
Riverview Trust Company does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
*Dates of political party control of the White House correspond with presidential inauguration months.
**Average daily return and period standard deviation for election years was 0.025% and 0.515%, respectively. Average daily return and period standard deviation for non-election years was 0.038% and 0.221%, respectively.