As the 2024 presidential election looms, investors are naturally bracing for potential volatility in the stock market. The uncertainty around which candidates will take office and, by extension, which policies will be set into law, can carry meaningful implications for investors and financial markets more broadly. Understanding how election years historically impact market performance is crucial for making informed investment decisions. This article delves into the historical data and offers actionable strategies for navigating these unpredictable times.
Overall Market Trends in Election Cycles
The performance of the S&P 500 during presidential election cycles offers a fascinating glimpse into the stock market’s reaction to political events. These cycles typically present a mix of investor responses influenced by the political atmosphere and impending economic policies. Particularly notable are re-election years like 2024, which historically have witnessed more pronounced market gains. This trend is often attributed to the economic stimuli and growth-oriented policies implemented by incumbent presidents, aiming to demonstrate economic strength and stability. These actions tend to boost investor confidence, resulting in improved market performance.
Sectoral Dynamics Amidst Political Changes
The impact of presidential elections on the stock market also extends to various economic sectors, each responding differently to the changing political and economic landscape. For instance, the financial services and energy sectors have often shown resilience or even growth during past election years, while the technology sector sometimes experiences slower growth. These sectoral performances are heavily influenced by the policies proposed by presidential candidates, as changes in regulatory environments, tax policies, and government spending priorities can significantly alter sectoral dynamics. As such, the performance of these sectors is not static but fluctuates with the evolving political climate, requiring investors to stay informed and adaptable.
Pre-Election Year Market Behavior
In the months leading up to a presidential election, the stock market often experiences a period of heightened volatility and generally lower returns. This trend is attributed to the uncertainty surrounding potential policy changes and their economic implications. Investors, wary of the unknown, tend to adopt a more cautious approach, resulting in reduced market gains.
Post-Election Year Market Outlook
Contrasting the pre-election year, the stock market typically regains momentum in the year following an election, regardless of which party takes office. This rebound is often a reaction to the resolution of political uncertainty, allowing investors to make more confident decisions based on the established policy direction.
Strategies for Investors
During election seasons, investors should consider several strategies to mitigate risks:
- Diversification: Spread investments across various sectors to reduce risk.
- Dollar-Cost Averaging: Regularly investing a fixed amount can help navigate market fluctuations.
- Long-Term Focus: Prioritize long-term investments over short-term gains.
- High-Yield Savings Accounts: These can offer a safer haven during volatile periods.
- Professional Advice: We can provide tailored strategies for navigating market volatility.
Challenging the “Presidential Election Cycle Theory”
The “Presidential Election Cycle Theory” suggests that the latter half of a presidential term is stronger for the market. However, recent presidencies, including those of Barack Obama and Donald Trump, have shown inconsistencies with this theory. For example, Obama’s first two years outperformed his third, and Trump’s first year was more profitable than his second.
These deviations emphasize that while historical data can provide insights, it’s not a foolproof predictor of future market behavior. External factors like economic shocks and recessions can significantly impact market trends, as seen in 2008 and 2020.
A Prudent Investment Approach
Given the unpredictability of election year markets, investors are advised to:
- Understand Risk and Return: Assess personal risk tolerance and investment goals.
- Diversify Investments: A well-diversified portfolio can weather market volatility better.
- Avoid Over-reliance on Historical Patterns: While informative, historical trends should not be the sole basis for investment decisions.
Conclusion
As the 2024 election approaches, the stock market’s reaction remains uncertain. While historical data offers valuable insights, it’s important to recognize the multitude of unpredictable factors that can influence market behavior. Investors are encouraged to adopt a balanced and informed approach, focusing on long-term stability and diversification to navigate through the potential market volatility of election years.
For any questions on stock market trends in presidential election years, give us a call.
Have a great weekend!
Sources: Located at the bottom of the article
Golf Tip of the Week
1 Percent Challenge: How To Instantly Spot That Your Clubs Need Re-Gripping
We get it. If you live in wintery climes, you’ve likely put the clubs away and don’t plan to pull them out until spring. That’s a mistake. Not because you should be playing to temp greens in freezing temperatures, but because it’s a great time to take stock of getting your clubs in shape (the following also applies for all you lucky stiffs playing in warmer temps, too). Among the most important steps: checking your grips. You spend endless dollars chasing a few yards through instruction or equipment purchases but you should be aware that research from Golf Pride reveals fresh grips can add up to two yards to your shots. Why? Worn handles tend to promote poor swings or a poor grip—either or both highly detrimental to your game.
The Solution: It’s not as simple as just re-gripping your clubs. You need to think of grips as equipment for the hands, not just handles. Yes, if your grips are slick or have wear marks, you know it’s time to swap them out. But a high majority of players have grips that are the wrong size, too. Know how many clubs have stock grips that are standard size? 100 percent. Know how many golfers actually need standard-size grips? About half that.
Today: Give your grips (all of them, even the putter) a full inspection. Are they slick? Are they cracked? Is the paintfill gone? Do they feel too small or too large? Place your hands on each club and check the pressure-point areas where the thumb on your top hand and the “V” area of your bottom hand meet the grip and look for indentations. All are red flags.
And then . . . : If you find none of the above, good for you. You’re in great shape. But odds are something will feel or look off. Go to your local golf store—hopefully one on Golf Digest’s Top 100 Clubfitters list—and have a conversation with a fitter. They’ll get you in the proper type and size of grip because, just like gloves, grips are not a one-size-fits-all proposition.—E. Michael Johnson
Day 1: How to check this make-or-break golf swing position—quickly
No, posture isn’t the most interesting topic in the golf swing, but it is one of the most important. Good posture can help you stay balanced and can help you move better. It can give you stability while also improving your ability to rotate. Landing in a good setup position is the first step towards more consistency and better results. Bad posture can ruin a golf swing before it even starts. There’s a reason why pros sweat over the details of their posture, and the good news is that this boring-but-important swing key is one of the easiest to check.
The Solution: A good posture is one that activates and relaxes the key areas of your golf swing. That means a subtle amount of knee flex, tilting your upper body forward from the hips, not too much curve in your spine, and your weight balanced on the balls of your feet.
Today: Stand upright to the side of a long mirror. Drop your arms down, with your palms facing your thighs, and begin slowly tilting from your hips until your fingertips touch your kneecaps. Cross your hands over your shoulders and get comfortable in your new setup posture.
And then . . . : Repeat this routine five times, daily. On the driving range, add a golf club, and follow this drill by hitting balls and ingraining the feels.—Luke Kerr-Dineen
More on the 1 Percent Challenge
Look, every golfer has big goals—30 more yards, 15 fewer pounds, tighter lines and better scores. We’re not here to tell you those goals are out of reach. The problem with most New Year’s resolutions, though, is they start you at the foot of a mountain without a clear map to the top.
The Golf Digest 1 Percent Challenge, meanwhile, is meant to be both ambitious and achievable. None of the daily individual tasks will be so arduous that you’ll need much time to cross them off your list. These are the type of modest improvements intended to make you just 1 better percent than you were the day before. But they’re also meant to provide you with a new skill that over time, can make a meaningful difference in your game.
The way it works is simple: Our team of expert editors in golf instruction, equipment and fitness have devised 23 challenges for each weekday in January that can be completed at home with minimal equipment. Things like checking your posture at address in the mirror, identifying yardage gaps in your club setup and testing the strength of your golf muscles. All of these challenges will have immediate value. But each challenge also comes with a suggested follow-up task that can lead to better habits, and ultimately, better performance.
It is the perfect way to get ready for the next golf season, even if you live somewhere where “real” golf is still months away. The more you follow along, the better your headstart on everyone else. —Sam Weinman
Tip adapted from golfdigest.comi
Recipe of the Week
Healthy Blueberry-Carrot Muffins
12 Muffins
Ingredients
- Cooking spray
- 1 1/2 cups blueberries
- 2 cups whole wheat pastry flour or white whole wheat flour
- 2 teaspoons baking powder
- 1 teaspoon ground cinnamon
- 1/2 teaspoon fine salt
- 1/2 cup 2-percent lowfat milk
- 1/2 cup melted virgin or extra-virgin coconut oil
- 1/2 cup packed light-brown sugar
- 2 medium carrots, shredded and squeezed dried
- 2 large eggs
- 1 teaspoon finely grated lemon zest
- 1 teaspoon pure vanilla extract
- 1 tablespoon turbinado sugar
Instructions
- Position an oven rack in the middle of the oven and preheat to 350 degrees F. Line a 12-cup muffin pan with paper liners and spay the liners lightly with cooking spray.
- Reserve 1/2 cup of the blueberries for garnish. Place the remaining blueberries in a large bowl and lightly crush them with the back of a fork (crushing keeps them from sinking to the bottom of the muffin batter during baking). Add the flour, baking powder, cinnamon and salt to the blueberries and stir to combine. Whisk together the milk, oil, brown sugar, carrots, eggs, lemon zest and vanilla in another bowl, whisking until no clumps of brown sugar remain. Fold the milk mixture into the flour mixture until just combined (don’t worry if there are a few lumps).
- Divide the batter evenly among the prepared muffin cups. Press the reserved blueberries into the tops of the muffins. Bake for 10 minutes. Remove the pan from the oven and sprinkle the tops of the muffins with the turbinado sugar. Rotate the pan and continue to bake until the muffins are golden and a toothpick inserted in the centers comes out clean, 20 to 24 minutes. Cool the muffins in the pan for a few minutes, then transfer the muffins to a rack to cool completely.
Recipe adapted from Foodnetwork.comii
Health Tip of the Week
Purple Power Foods!
Where Does the Power Come From?
In fruits and vegetables, purple is often a sign of nutrients called anthocyanins. Like other phytonutrients, your body doesn’t need them to work, but they do help protect your cells from damage that can lead to illness and disease. And that’s on top of any other health benefits you’ll get from eating these foods.
Plums
They’re one of the first purple foods people think of. And the more color in the fruit, the more of those anthocyanins. Riper fruits will also have more usable nutrients. The peel could have as much as 20 times the antioxidants as the flesh inside.
Berries
Though anthocyanins are linked to the color purple, the pigments can range from red to blue. Blueberries, blackberries, strawberries, bilberries, black currants, and mulberries all have similar properties. They may boost your brainpower and your mood, according to studies of kids and adults using blueberries. Scientists think the anthocyanins help your brain cells talk to each other.
Potatoes
Try the ones with purple skin and flesh. Besides anthocyanins, they have 2-3 times the total antioxidants of a typical white potato, which is loaded with potassium, magnesium, vitamin C, and fiber.
Red Cherries
The anthocyanins that give them their dark rich color may help lower your blood pressure and keep your blood vessels healthy and soft. They also seem to help with joint problems like osteoarthritis and gout, a painful condition where crystals gather in your feet or ankles. And cherries are bursting with nutrients that together may help prevent cancer, heart disease, and diabetes.
Grapes
The anthocyanins of grapes can run from red to black. These juicy gems are known for having resveratrol, which has gotten a lot of attention for being part of a group of nutrients that work together to help protect your cells from damage that can lead to disease. The skins of grapes give red wine its color — and its resveratrol.
Cauliflower
Just a single gene tells a cauliflower to gather more anthocyanins into its tissues, turning this normally white vegetable purple. Otherwise, it’s like the stuff you already know: rich in phytonutrients, vitamin C, and minerals. Steam, stir-fry, or microwave — or eat it raw — to preserve the most nutrients.
Purple Carrots
Find them at your local farmers’ market or foodie restaurant. Try them roasted, pickled, or broiled. You’ll get their extra anthocyanins as well as the beta carotene and other carotenoids found in orange carrots that may help stop cancer and improve your immune system.
Red Cabbage
It may be easier for your body to use its anthocyanins when you cook it. And when you ferment cabbage to make sauerkraut or kimchi, you’ll get natural probiotics that nourish the bacteria in your gut — your “microbiome.” These help your body fight germs, absorb nutrients, digest food, and even control anxiety.
Beets
Their color comes from different antioxidants called betalains instead. You’ll also find these red and yellow pigments in the stems of chard and rhubarb, as well as some mushrooms and fungi. They break down more easily when you cook them than anthocyanins do, so try steaming rather than roasting. Beets will add sweetness and a beautiful purplish-red color to your smoothies. These veggies are good for your heart, brain, and blood sugar.
Purple Icing
No, the color of processed foods like cakes and candies doesn’t mean the same things it does in fresh fruits and vegetables. But anthocyanins are often used to give dark color to other foods like blue corn chips, soft drinks, and jellies. The amount may not be enough to change your health for the better, yet they can be a safe choice if you want to avoid artificial dyes.
Tip adapted from WebMD.comiii
Copyright (C) 2021. Ballentine Capital Advisors. All rights reserved.
Our mailing address is:
Ballentine Capital Advisors
15 Halton Green Way
Greenville, SC 29607
Sources:
Election 2024: How Stocks Perform in Election Years
How Do Elections Affect The Stock Market?
Stock Market Performance in Presidential Election Years
Disclosure:
Ballentine Capital Advisors is a registered investment adviser. The advisory services of Ballentine Capital Advisors are not made available in any jurisdiction in which Ballentine Capital Advisors is not registered or is otherwise exempt from registration.
Please review Ballentine Capital Advisors Disclosure Brochure for a complete explanation of fees. Investing involves risks. Investments are not guaranteed and may lose value.
This material is prepared by Ballentine Capital Advisors for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation or any particular security, strategy, or investment product.
No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. You should not assume that investment decisions we make in the future will be profitable or equal the investment performance of the past. Past performance does not indicate future results.
Advisory services through Ballentine Capital Advisors, Inc.
i https://www.golfdigest.com/story/1-percent-challenge
ii https://www.foodnetwork.com/recipes/food-network-kitchen/healthy-blueberry-carrot-muffins-3362758
iii https://www.webmd.com/food-recipes/ss/slideshow-purple-power-foods
