Do Elections Matter to the Stock Market? | The Informed Investor 60
Advisors field client questions about elections every cycle, and this episode offers a framework for those conversations built around market pricing and historical return patterns. It covers the specific comparisons clients tend to raise, such as midterm years and returns across administrations.
Summary
By the markets & outlook deskEpisode 60 of Dimensional's The Informed Investor podcast looks at whether elections should prompt portfolio changes. Mark Gochnour, Wes Crill and Jake DeKinder walk through the efficient market hypothesis, stock returns during and after midterm years and across presidential terms, the influence of economic indicators, and expected versus unexpected election outcomes. They also discuss stock market volatility and close with takeaways.
- The speakers argue the data does not show a strong connection between election results and stock market performance.
- Fourteen of 17 presidential terms since 1929, across Democratic and Republican administrations, ended with positive returns for the S&P 500 Index.
- Market prices have already incorporated election-related information along with other developments, including economic indicators.
- The episode distinguishes between expected and unexpected election outcomes in discussing market reaction.
Chapters
From the publisher’s description| Time | Chapter | Length |
|---|---|---|
| Intro | 1 min | |
| Headlines | 1 min | |
| Efficient market hypothesis | 1 min | |
| Stock returns during and after midterm years | 2 min | |
| Stock returns during presidential terms | 1 min | |
| Impact of economic indicators on stock returns | 2 min | |
| Expected versus unexpected election outcomes | 2 min | |
| Stock market volatility | 1 min | |
| Key takeaways | 3 min |
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Videos and podcasts are embedded from their publishers. Selections and summaries are editorial and are not investment advice.