’16 Election Market Reactions

We are reminded this year that elections can be unpredictable. Who could have guessed, for example, that a man so far outside the mainstream of politics as Donald Trump would be the Republican candidate for President? Or that this election would provide so much free advertising for Twitter?

But, for us, one thing can always be relied upon in an election year; people want to know how the vote will affect the stock market and the economy. While there are many opinions – and many studies – on the matter, none has proved able to reliably predict how the market will, in fact, react to election day results.

Democrats, Republicans, Libertarians, Greens and even a few “Bernie or Bust-ers” all hope to see gains this year – but the truth is that no matter who wins, any impact on the market will likely be short term. And that is something we can see by reviewing the last 100 years of data.

Using election cycle data from 1900 through 2012, Ned Davis Research yields a chart clearly showing the real – but limited – impact that our Democratic process has on financial markets. Presidential elections do cause swings, particularly in their final weeks. When incumbent parties lose, these swings are biggest. But post-election markets tend to rally by year’s end.


It’s worth understanding how people feel about the election. But we encourage you to remember that there are many more factors affecting markets than our presidential election. Over a full market cycle, success is determined by fundamentals, not by shifts in sentiment, short term momentum or campaign rhetoric.

We tend to avoid making sudden moves into or out of markets based on headlines or what Donald Trump says on Twitter. Instead, we try to assess a variety of scenarios, then construct a diversity of portfolios designed to meet longer-term goals while minimizing short term risks. However, it is always interesting to keep abreast of how financial writers are spinning this years (very unique) election.

Despite the relatively predictable long-term data analysis above, there are many articles opining on how one outcome or another will swing markets. It seems that for every article declaring that Republican victories are good for business, another finds data to support the opposite. Some writers claim that markets are barely affected by political factors, while others fret that if we make the “wrong” choice, stocks will surely plummet.

Google “election year stock market” and you can feast on starkly contrasting opinions, wildly varying theories, the latest studies and a host of contradictory expert opinions. To save you some time, we have collected a few examples of the kinds of arguments we commonly encounter in an election year. We hope you enjoy these contrary viewpoints – and then ignore them completely.

Democrats are good for the market:




Republicans are good for the economy:


It makes no difference:





It’s Impossible To Know:




Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bogart Wealth, LLC [“Bogart Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bogart Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Bogart Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bogart Wealth’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.bogartwealth.comPlease Note: Bogart Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bogart Wealth’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a Bogart Wealth client, please contact Bogart Wealth, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

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