Broker Check

Which political party has been better for investors?

March 26, 2024

Which political party has been better for investors?


If you were to go back to 1933, when Franklin Delano Roosevelt was elected to his first term of office, and you invested $1,000 in the stock market, you would have $19 million today. Over these 90 years, America has experienced the Great Depression, the Second World War, the Korean War, Vietnam, Stagflation, Desert Storm, the Dot-com bubble, the War in Afghanistan, The Great Recession, and COVID-19. The President of the United States wasn't mentioned in that list. If you were wondering, there have been eight Democrats and seven Republicans sworn in as our commander-in-chief since 1933; two of these men have been impeached. Despite all this turmoil and political parties practically splitting their time in office, the stock market has still averaged a 10% return.

With a presidential election coming up in November, many investors feel a sense of angst about what to do with their money. Politics can elicit strong emotions, sometimes influencing our decision-making. Typically, investors respond in one of two ways: sit on the sidelines or remain committed to a financial plan they helped create with their financial advisor.

Sitting on the sidelines is much like timing the market, and most investors generally make reactive decisions. When we see that our account has lost money, the damage, on paper, has been done. Selling investments at a loss to get out of the market only makes that loss permanent. What about the recovery? Investors then see the market is recovering and decide to jump back in. Again, this is a reactive decision because much of the market rebound has already occurred when a recovery is reported.

Picking a diversified stock-to-bond allocation that provides reliable retirement income over the long term is what our advisors focus on at Harford Financial Group. This allows us to sell bonds when clients need distributions in the short time and to hold on to stocks so they can grow and generate money in the long term. Know that we are awake at the wheel monitoring investments and conducting research with top financial professionals, so you don't have to.

The person elected president on November 5th may or may not be your choice, but we must remember our money is not invested in the person sitting behind the Resolute Desk. It is invested in the best-run companies in America. The men and women who run these companies are there to increase shareholders' value despite political or economic conditions. Between now and election day, the news, the internet, and social media will pound the war drums of what this election will bring. We encourage our clients to remember that this noise must be tuned out and that "time in the market" rather than "timing the market" should guide you.