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Market Returns During Election Years

As we get closer to the 2016 Presidential election, I’m besieged by inquiries from individuals wondering “what should I do with my investments”.  The simple answer is, hopefully nothing!  That ASSUMES that these individuals have developed and are implementing an investment policy statement that guides their investment decisions.

While there is certainly a lot of angst around the forthcoming elections, history suggests that from the standpoint of the market it will not be a big deal.  Now it’s always possible that “this time is different”; however, I would not count on it.

Recently my friends at Dimensional Fund Advisors, put out some great information about the impact of elections on the stock market.  The key conclusions were:

  • It is difficult to identify systematic return patterns in elections years.
  • On average, market returns have been positive both in election years and the subsequent year.
  • Market expectations associated with election outcomes are embedded in security prices.

Bottom line is that the research continues to support the concept of an efficient market — the collective knowledge of the market is smarter than any of us individually.

You can download a detailed copy of the research here or you can view it below.

Remember, investing requires discipline.  It’s just too bad that our politicians don’t have the same discipline in their behaviors!

Have a great week.



At F5 Financial Planning we focus on helping individuals and families find balance between faith, friends and family, fitness and finance.  We make sure that they have the financial freedom to enjoy those things in life that are important to them.  And while we believe the left-brain facts and data are critical; we work with our clients to get them in the right state of mind to focus on the goals they want to achieve.

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Curt Stowers

Curt Stowers

Curtis Stowers helps individuals and families across the United States grow their financial assets, particularly in the Naperville, IL region. He is a Certified Financial Planner, holds a Ph.D. in Industrial Engineering from the University of Illinois, and is the founder of F5 Financial.