Markets during Presidential cycles: In the midst of a cliff hanger in the US elections, here is the good news.
- Historically, November and December have been strong months for the US markets during presidential elections
- The markets have been up regardless of whether a Democrat or Republican won the election
We expect there to be some short term volatility, particularly if there is a contested election. The Bush-Gore election was one cycle that was marked by market upheaval. Several causes likely contributed to that weakness including a close race, bursting of the dotcom bubble, and rising interest rates. This time around we have COVID in the mix.
The key remains to stay focused on investing for the long term and to ignore some of the election noise as the final results come in.
Data source: FMR Co, Index = Mix of market indexes including Dow and S&P 500
