Do financial markets care who the President is?

Source: Dimensional Fund Advisors

As we approach another U.S. presidential election, many investors start to wonder how the results might impact their portfolios. Will we see higher market volatility in November? What if a particular candidate wins or loses? Is the stock market doomed if the Democrats or Republicans take office?

The quick answer: You can't predict market performance based solely on who wins the White House. History has shown us that no president—whether Obama, Trump, or Biden—has single-handedly transformed the stock market or economy, despite the dire warnings from both sides of the political aisle.

Consider this: The U.S. stock market is valued at $50 trillion, and the economy generates $28 trillion in GDP annually. These are massive, complex systems that no single individual controls.

It’s natural for investors to look for patterns between election outcomes and market trends. You might guess which sectors will thrive depending on the election result. But no matter who is in office, market volatility is a constant.

What history tells us is that, over nearly a century, the stock market has trended upward, regardless of who sits in the Oval Office. Investors are placing their bets on companies that focus on serving customers and growing their businesses, not on political figures.

While U.S. presidents can influence market returns, so do many other factors—foreign policy decisions, interest rate changes, oil prices, and technological advancements. Stocks have consistently rewarded disciplined investors, whether under Democratic or Republican leadership.

So, when making investment decisions for your long-term future, it’s best to tune out the political noise.