The Week in Review: February 12, 2024
There is an Election This Year
Last week, we examined the relationship between interest rates and stocks. This week, we will analyze market performance during the presidential election years.
So, what might we expect based on historical returns during a presidential election year?
Since 1928, the S&P 500 Index has averaged an annual increase of 11% (dividends were reinvested). The index finished the year higher 73% of the time, according to data provided by the NYU School of Business.
Let’s turn to the years in which a presidential election was held.
In a presidential election year, the S&P 500 averaged an advance of 11%, in line with historical norms. The S&P 500 rose 83% of the time, topping the long-term average of 73%.
When the incumbent ran for reelection, performance improved. The S&P 500 averaged an increase of 15% during the 14 periods surveyed. The S&P 500 Index finished the year higher 93% of the time (1932 was the exception when Herbert Hoover sought a second term during the Great Depression).
The returns include 1948, 1964, and 1976, when the respective vice presidents had assumed the presidency and ran for reelection. Returns do not include 1940 and 1944, when FDR ran for a third and fourth term.
Bottom line
Perhaps presidents seeking reelection implement policies that benefit stocks and the economy as they seek a second term. The economy is usually the top issue for investors, not politics.
Whatever may account for an incumbent's upbeat performance on the campaign trail, let’s not forget that investors typically respond to economic fundamentals, not politics.
Market Summary
Two for the road:
America now imports more goods from Mexico than from China, with Chinese imports down a staggering 21% from the prior year, and their imports are now just barely ahead of the $388 billion the United States imported from Canada. - Chartr, January 21, 2024
While the cost of living is hitting everyday costs hard, the price of plane tickets is at a 15-year low- in the United States, at least. The average airfare is nearly 25% less than it was pre-pandemic, and in fact, it hasn’t been this cheap since 2009.- CNN, January 20, 2024
Please do not hesitate to contact me with any questions or concerns. I hope you have a wonderful week!
Bill Stordahl, CFP®
Managing Director
Stordahl Capital Management
This information should not be construed as investment, tax, or legal advice. This commentary reflects the personal opinions, viewpoints, and analyses of the Stordahl Capital Management, Inc. employees providing such comments and should not be regarded as a description of advisory services provided by Stordahl Capital Management, Inc. or performance returns of any Stordahl Capital Management Inc. Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this piece constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Accessing websites through links directs you away from our website. Stordahl Capital Management is not responsible for errors or omissions in the material on third-party websites and does not necessarily approve of or endorse the information provided. Users who gain access to third-party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from the use of those websites. Please note that trading instructions through email, fax, or voicemail will not be taken. Your identity and timely retrieval of instructions cannot be guaranteed. Stordahl Capital Management, Inc. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results
1. The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly. Past performance does not guarantee future results.
2. The NASDAQ Composite is an unmanaged index of companies which cannot be invested into directly. Past performance does not guarantee future results.
3. The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly. Past performance does not guarantee future results.
4. The Global Dow is an unmanaged index composed of stocks of 150 top companies. It cannot be invested into directly. Past performance does not guarantee future results.
5. CME Group front-month contract; Prices can and do vary; past performance does not guarantee future results.
6. CME Group continuous contract; Prices can and do vary; past performance does not guarantee future results.