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Stocks After a Reelection

Stocks After a Reelection

October 21, 2020

Now that we have your attention with that eye-grabbing title, there’s definitely something to the idea that stocks perform better the year after a sitting president wins reelection. “Think about it—usually when a president wins reelection, it means the economy is going pretty strong, so stocks tend to do well,” explained LPL Financial Chief Market Strategist Ryan Detrick. “The flipside is that new leadership in Washington can bring with it potential change that could rock the boat and hold stocks back.”

Since 1950, the S&P 500 Index has added an average of 9.6% in the year after a president wins reelection. In fact, after Presidents Ronald Reagan, Bill Clinton, and Barack Obama won their reelections, stocks gained close to 30%.

View enlarged chart.

When there was new leadership in Washington, the S&P 500 added only 4.8% the following year, and it has been higher only 50% of the time.

View enlarged chart.

Lastly, as shown in the LPL Chart of the Day, we combine the two charts from above, showing that stocks have tended to do better the year after a president has won reelection than when a new president takes office.

View enlarged chart.

For more of our thoughts on the upcoming election, economy, and stocks market, please watch our latest LPL Market Signals video below and subscribe to our YouTube channel so you don’t miss anything!



This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

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All index and market data from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

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