Election years give many clients the jitters. This is understandable. A lot seems to be at stake, and we’re inclined to think that things will get worse if our party doesn’t win.
During these times, I like to remind clients to zoom out. Several studies have shown that the stock market doesn’t really care who the president is.
Let me share a couple of quick facts about American elections and the stock market:
3 Republicans, 3 Democrats
According to Kiplinger’s,1 since 1889 Democrats and Republicans share bragging rights for best returns by presidential administration. In the 1920s, the market averaged an astonishing 26.1 percent under Republican Calvin Coolidge.
Republicans William McKinley and Donald Trump (first term) join Coolidge alongside Democrats Bill Clinton, Barack Obama, and Joe Biden to round out the top six presidential administrations by market returns.
The bottom six administrations? Four Republicans and two Democrats.
The takeaway isn’t that Republicans are worse for the stock market. Conservative stalwart Herbert Hoover (worst market performance) faced the 1929 stock market crash right after taking office, and President George W. Bush (2nd-worse performance) contended with the dot-com crash and the terrorist attacks of September 11, 2001, his first year.
Mid-term downs and ups
Midterms, such as the ones coming up in November, are congressional elections in the years between presidential contests.
These generate a ton of noise as pundits and candidates try to convince voters to support the existing power setup, or go a different direction.
Markets dislike uncertainty, and recent midterm years have been especially volatile. Historically, early in a midterm year, returns tend to be lower. But as the election nears, the market tends to rally, further improving once the results are known.2
The upshot
The U.S. stock market has delivered positive long-term returns under both Democratic and Republican administrations.
When it comes to how the market behaves, wars, political crises, and recessions on the negative side and earnings growth, productivity, and economic expansion on the positive side have always mattered a lot more than who occupies the White House.
Here at Corner Post, our clients are long-term investors. We coach long-term investors to always expect volatility, particularly with stocks. This approach works best when you cover short-term needs with income or cash in the bank. That way, you've got a cushion against the ups and downs of the news.
Citations:
1) Kiplingers, “The Best and Worst Presidents (according to the stock market), https://www.kiplinger.com/investing/602714/best-and-worst-presidents-according-to-the-stock-market, accessed 4/7/26.
2) Capital Group, “How U.S. Midterm Elections May Affect Markets,” https://www.capitalgroup.com/advisor/insights/articles/midterm-elections-markets-5-charts.html, accessed 4/7/26