Why investors should stay invested no matter who wins in November

Introduction

Yahoo Finance recently released the third volume of its Chart Book, featuring more than 30 charts from renowned economists and strategists across Wall Street. These charts provide vital insights into economic and market trends. One notable analysis focuses on election cycles and their potential impact on investment portfolios.

Examining Election Cycles and Market Trends

In a highlighted chart from Sam Row over at Ticker, which references a Charles Schwab strategist, one crucial point emerges: the significant benefit of staying invested in the market for the long term and leveraging the power of compound interest.

The chart examines the hypothetical return of an initial $ 10,000 investment over approximately 60 years, from 1961 to 2023. Here’s what the data reveals:

Under Republican Presidents: The return would be $ 102,000.
Under Democratic Presidents: The return would be $ 500,000.
Staying Invested Throughout: The return would soar to $ 5.1 million.

The takeaway is clear: regardless of who occupies the White House, the long-term trend in the markets has consistently been upward. It showcases the extraordinary growth potential of $ 10,000 invested in the stock market over six decades without attempting to outguess changing political leadership.

Insights Beyond Presidential Terms

Another valuable observation comes from Keith Lerner at Truist, who examined S&P 500 returns during the Obama, Trump, and Biden administrations. He found annualized returns ranging from 13% to 16% across these periods, showcasing strong performance across different political parties and varying economic conditions.

This historical data underscores one crucial piece of advice from financial strategists: avoid letting political biases influence investment decisions. The overarching message is to trust in the long-term upward trend of the markets irrespective of political changes.

Keywords

Election Cycles
Market Trends
Compound Interest
Investment Returns
Political Influence
Long-term Investing
S&P 500
Presidential Terms

FAQ

Q: How much would a $ 10,000 investment return if only invested under Republican presidents from 1961 to 2023? A: The return would be $ 102,000.

Q: How much would a $ 10,000 investment return if only invested under Democratic presidents from 1961 to 2023? A: The return would be $ 500,000.

Q: How much would a $ 10,000 investment return if stayed invested throughout regardless of the president? A: The return would be $ 5.1 million.

Q: What have been the annualized S&P 500 returns during the Obama, Trump, and Biden administrations? A: The annualized returns were between 13% and 16%.

Q: What is the main advice from strategists regarding investing during election cycles? A: The main advice is to stay invested over the long term and not let political biases dictate investment decisions.