Presidential Terms and their long-term impact on the market

Share on facebook
Share on twitter
Share on linkedin

Are you one of the many investors who are awaiting the results of the US election to make an investment decision?  Well, don’t waste another minute of your life worrying about it.  I have a bold prediction…regardless of who wins, there will be a market drawdown of at least 15% during their term as president.  For reference, a drawdown is the peak to trough rate of return, during a specified period, before it recovers back to its peak.

Why am I so sure?  As I’ve talked about in the past, the global market is volatile.  On any given day, the market can be up, or down, depending on real-time information that day.  In every past president’s term, going all the way back to Herbert Hoover in 1929, there has been at least a 17% drawdown.

The worst drawdown occurred in Hoover’s term.  The US market was down 86% over a specific period.  It makes sense as Hoover’s term started right before the Great Stock Market Crash of 1929 (October).  The least drawdown occurred in Jimmy Carter’s term.  See attached chart.

Democrat or Republican President, the market will do what it has always done – provide growth over the long term.  When you break it down to brass tacks, what is the market?  It is a collection of all publicly traded companies.  When you invest in the market, you are becoming a shareholder in these companies.  Companies are in the business of generating profits for their shareholders.  The following chart illustrates the market in action, regardless of the party in the White House.

I am certainly not advocating that short-term investors ignore the current market environment.  However, given historical data on presidential terms and subsequent market performance, I am simply suggesting that investors not base their long-term investment decisions on election results.

Related articles

The Great Escape Webinars & Virtual Events

The Great Escape

The Great Escape. Most of us have seen the famous movie “The Great Escape” and of course this is the war story we all think …

Read More →
Results Rob's Reads

‘More spending, more deficits, more lacklustre GDP growth’: Reaction to election results

It’s been 1 week since the election and people are starting to think about what’s in store for our country’s future. Here are some opinions …

Read More →
Lease vs Buy Articles

Lease vs Buy

A client approached me with this question the other day. Ahh, the age-old question that really doesn’t have a “right” answer. There are pros and …

Read More →

Financial Planning Advice from Canada's Top Financial Advisors

Sign Up To Receive Email Updates On The Financial Industry And Complimentary Workshops.

By providing your e-mail address you provide The McClelland Financial Group of Assante Capital Management Ltd. with your express consent to send you electronic communications. If you choose to discontinue receiving e-mails, you may withdraw consent by contacting [email protected].

Copyright Assante Wealth Management. © 2021

Disclaimer | Assante advisory services are offered through Assante Capital Management Ltd. Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada. The services described may not be applicable or available with respect to all clients. Services and products may be provided by an Assante advisor or through affiliated or non-affiliated third parties. Some services and products may not be available through all Assante advisors. Services may change without notice. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

We have a team of advisors each specializing in varying portfolio sizes. Please let us know the approx. amount of your investable assets to help us to direct you to the advisor that is best suited to you.