Join Brendan on Coffee with Waymark as he dives into the data to uncover surprising trends in market performance under different administrations. Discover why it's essential to approach investing with a clear mind, free from political biases. Grab your coffee and join us for this 7-minute, eye-opening analysis.
Topics Discussed:
Political beliefs and investments
Market performance under different presidencies
Influence of partisan perceptions
Fact-based investment decisions
Transcript:
Hi, and welcome to another episode of Coffee with Waymark. Today we're going to talk a little bit about politics and the election, the upcoming election. So as we start going into the election cycle, and the vitriol on both sides will probably expand and one side will say that the economy's great. The other side will say that the economy is in the toilet. I think it is worth bearing in mind that people's perceptions sometimes cloud their judgment when the reality of the situation is that it's not as good or as bad as what you may think. So I have a couple charts that I want to show you that just do a little bit of a history lesson on the market. So let's start with that. So let me open this chart up here. And what this is pretty much indicating is the percentage of Republicans and Democrats who feel like the economy is either excellent or good.
No big surprise here that when a Republican's in the presidency that Republicans feel like the economy's great. And then when a Democrat's in office, their thoughts change pretty dramatically and they feel like the economy's in the toilet. And then when the Republican comes back, they feel great about the economy. And then when the Democrat comes back, the opposite is true. And not surprisingly, when a Democrat is looking at the economy and they think that there is a Republican in there, they don't feel so hot about the economy. And when a Democrat is in, they feel real good about the economy at that time. And the reason I bring this up is that during Obama's presidency, I did have some Republicans who said that he was a socialist and that he was going to destroy the economy and that he had no interest in capitalism or anything like that.
They took money out and put it on the sidelines. And similarly, I had Democrats that when Trump was elected, they thought that he was such an unstable force that he was going to lead to financial collapse and all the other things that Democrats like to talk about when it comes to Trump. And not surprisingly, when Biden was elected, they felt very bad about Biden. So long story short, perception is reality, but the reality of the situation, it surprises a lot of people that I've shown this chart to. So let's take a look. So what this is pretty much saying is how the S&P performed over the last four presidencies.
So during Bush's tenure, which was between January of 01 and of 09 unfortunately had to deal with two different major crises, one being the dot com bubble bursting, and the second being the housing bubble bursting. During his presidency, the average annual rate of return of the S&P 500 was -4.5%. When Obama was elected between January of 09 and January of 17, the market actually went up on average 16.3%. When Trump got in between 17 and 21, the market was up 16% again on average each year. And then again, big surprise that a lot of people don't necessarily give that much credit to Biden, but during Biden's presidency, the market has been up 9.2%. And that doesn't take into consideration some of the more recent increases in the market. So you could even make an argument that he might be in double digits at this point.
So again, I am not so shortsighted to realize that everyone has an opinion as to why Obama did really well during his timeframe. Trump did really well on his timeframe. And depending on which side of the aisle you're on, you'll give not as much credit to Obama and more credit to Trump or vice versa based on your political leanings. But again, I just am here to show you what the statistics are and how if you start making investment decisions based on your political leanings, that may be a mistake.
And so one more chart to show you that I think is an interesting one is how has the market performed on an annual basis each year during the presidency? And what you'll notice here, if I can one second here, what you'll notice is that this is based on Republican. If we had a Republican president and Republican Congress, if there was a Democratic Congress and a Democratic president or a divided government where obviously you have a Republican president and a Democratic Congress or a Democratic president and a Republican Congress - how the market has actually performed over that timeframe. And that's pretty much the tale of the tape. So you make the argument that having an all Republican Congress in Washington and President, which has happened 11% of the time, has historically been a good thing. Democrat ruling both may surprise a few people, but it actually was the second best in a divided government, which is pretty much what we have today is the worst performing.
But again, one of the things that you'll notice is that during Bush's presidency, he did actually have several years where he had both the Congress and obviously the executive branch, and he was able to see some pretty nice rates of return during that timeframe. So you can see that here. You have Obama, and again, it was kind of surprising to a few people who would think that having Obama in the presidency and a Democratic Congress would be a bad thing, especially with some of the progressive things that they wanted to put in place. But the market actually performed well. This is during Trump here where you actually had a really good year and a not so good year in 2018. And then now we have a Republican, or excuse me, a Democratic Congress and a Democratic presidency where you have a little of both, where you had 2022, which is the big drop here, 2023 was the big positive.
So again, the only reason I'm showing this, I'm trying to be as neutral as possible with my comments, but I think there's a lot of misinformation out there. And depending on the news channel that you watch, it could be very biased one way or the other. And I'm just showing you the statistics. So that's all I'm going to say. I'm going to keep all my editorial comments to myself. You can make your own decisions and opinions, but those are the facts. That's the tale of the tape. And my only caution to you is don't let your political leanings influence how you invest.
So that's all I have for today. I hope this was helpful, and if you want to share it with your friends who may or may not feel the same way or differently than you, feel free to do so. Have a great day.
Brendan is the Managing Director for Waymark Wealth Management. He has extensive experience in comprehensive wealth management. His focus includes retirement planning, behavioral finance, investment portfolio construction, education funding, insurance & risk management, taxes, charitable giving, and estate planning. Brendan has an ability to take clients' complex visions and distill them down to simple action plans, helping them move from where they are today to where they want to be tomorrow.
All performance referenced is historical and is no guarantee of future results.
Securities and advisory services offered through LPL Financial,
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The opinions voiced in this video are for general information only and are not intended to provide specific advice or recommendations for any individual.