The 2024 presidential election is less than a year away. But some investors are already worried about who will win the big boy’s seat next November.
A Janus Henderson poll released Tuesday shows 49% of investors are very worried about the presidential election, outpacing the share worried about inflation, which 35% of respondents said they are very worried about, and the risk of a recession, which was cited by 29. %.
Among those “very worried” about the 2024 presidential election, Janus Henderson found, one demographic distinction stood out: Older investors are more worried than younger investors.
“Older Americans worrying more is no surprise,” wrote Kashif Ahmed, president of American Private Wealth, in an email. “They are the ones who pay more attention, and who actually bother to vote.”
As it turns out, it may be premature to predict what the market will look like. Paul Schatz, president of Heritage Capital, said the markets rarely worry about a presidential election until mid to late October in an election year.
“It’s almost impossible to formulate an investment process based on possible election outcomes until you’re literally just staring the election in the face,” Schatz said. “I’ve been doing this 34 years and I’ve never found worrying about the choice worth trying to make my clients money.”
Ironically enough, there are two things that seem to happen in every presidential election, he added. “In the first year, you usually get volatility, and two and more importantly, these exogenous events seem to happen more often than not in election years.”
Covid, the 2008 financial crisis and Y2K all happened in election years, but as Schatz said, “You certainly can’t attribute any of them to the current administration or the candidate at the time.”
The survey also found that the performance of the S&P 500 Index from 1937 to 2022 shows that the average annual return was 11.9%. During presidential election years, the average return was 9.9%, while in non-election years, the average return was 12.5%.
In election years in which the same party maintains power, the market return has historically been 11.8%, while in election years when the presidency changes parties, the market has averaged a 7.8% gain.
A house divided would also be good; the survey found that the average annual return of the S&P 500 was 15.9% with a Democratic president and 9.4% with a Republican.
Schatz said there is too much credit and blame on the person sitting in the White House.
“(When it comes to) client portfolios, you don’t want one party to control the House, the Senate and the presidency,” he said. “For customers’ money, you want some deadlock. Markets work very well with deadlock.”
At the end of the day, Kevin Brady, vice president at Wealthspire Advisors, said it doesn’t matter who runs the White House.
“Investors would be better off staying fully invested in both Republican and Democratic presidencies and congressional control (versus just selling and buying depending on which party is in control),” he wrote in an email.
“This is a form of market timing in a different name,” Brady added. “You have to be right and exit the market and go back in, and you have to be right several times. This is very hard to do.”