Every 4 years during the presidential elections, investors often ask these two questions.
- "How do the presidential elections impact market returns?"
- "Is there any kind of pattern that could help predict future market returns?"
On average, market returns have been positive in election years and the subsequent year. It is also difficult to identify systematic return patterns in election years. Market expectations associated with election outcomes are immediately embedded in security prices which is why trying to get ahead of that curve is such an uphill battle.
Experienced investors understand that successful investing is more about participating in long-term growth versus gambling to predict short-term market movements.