If you’re wondering what the effect of a US presidential election outcome might have on financial markets, you may be surprised to learn that markets have historically trended upward over time, regardless of who’s in the White House.
While US presidents can have some impact on markets, people tend to over-exaggerate their influence.
US Stock Market returns during the terms of US Presidents
Image source: My Dimensional Weekly Digest, 3 September 2024.
https://www.dimensional.com/au-en/insights/how-much-impact-does-the-president-have-on-stocks
Market forces respond to many factors, which are changing all the time – world leaders and governments, changes to interest rates, fluctuations in the price of oil, social, environmental and technological changes.
Experts can spend entire careers seeking to learn about these factors, so it’s unrealistic to think we have privileged insights. What we often have is just opinion.
Polarising media and political narratives can also add to the challenge, particularly if they misconstrue facts and oversimplify complex issues.
Put simply, the best we can do for our financial understanding is to seek reliable information from recognised experts and sources.
Making decisions with your money based on politics and the never-ending news cycle isn’t a sound financial strategy.
It can take a dose of humility to accept that markets move as they do and in ways that none of us can predict.
The one thing we can all do is be clear on our financial goals and what they can help us achieve.
Remember, the world will always do its thing. You do yours.
If you need help reaching your financial goals, talk to an adviser at Align Financial on 02 9913 9995.
More information on the effect of US presidents on stocks can be found at: https://www.dimensional.com/au-en/insights/how-much-impact-does-the-president-have-on-stocks
