Clear and present danger to sharemarkets posed by Republican presidencies
Despite the fact presidents are elected or re-elected every four years, and most investors operate on longer time horizons, the intersection of U.S. political leadership and the performance of the S&P 500 is a compelling subject for those eager to find or promote shortcuts to investment success.
The popularity of the analysis is partly due to regular elections providing a competition and a starting point from which a wealth of data enables investors to identify patterns and correlations between political regimes and market performance.
An analysis of the S&P 500 index from 1950 to 2023 reveals notable trends related to the political composition of the U.S. government.
Historically, the best average annualised returns from the S&P 500 (15.72 per cent) have occurred when a Democrat occupies the White House and congress is divided – akin to a hung parliament here in Australia.
This article was first published in The Australian on 16 November 2024.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Immediately after Donald Trump’s election as the next president of the United States, market analysts began exploring historical correlations to assess potential implications for investors.