The Election Doesn't Matter for Stocks

It's another contentious presidential-election year here in the U.S.

We're inundated every day, from every corner of the media, with new poll results or news on what each candidate is doing. Some people will claim that stocks will do better with one president or the other.

It's all just noise.

Figuring out whether markets do better under Republicans or Democrats is complicated (and the sample size is small).

Since 1945, markets have done better under Democratic presidents. However, we also see greater returns when Republicans control both chambers of Congress than when Democrats hold majorities in the House of Representatives and the Senate.

It's hard to say why the market reacts that way or even if it reflects anything the politicians do (or don't do). Some of the biggest Democratic-president/Republican-Congress years came during former President Bill Clinton's tenure in the '90s. That's when the dot-com bubble was swelling valuations across the market... eventually ending badly for lots of investors.

On the other hand, former Democratic President Harry S. Truman faced a Republican Congress in 1947... and the market fell by 0.3%.

So when it comes to this year's election, I'm not worried about what the winner will mean for my portfolio. Markets work in cycles regardless of who is sitting in the Oval Office. We'll see bear markets and bull markets whether Democrats or Republicans are in control of things. (And smart investors understand that, over the long term, stocks will help your wealth grow, even if you experience some bumps along the way.)

But one thing is true... Volatility tends to rise during election years, especially as we get closer to the election.

And according to my friend Marc Chaikin, for those who understand how to time the election cycle and combine it with his Power Gauge system, this could be the best year for investing this decade.

The last time Marc stepped forward with a similar announcement to kick off 2023, the stocks he recommended that day went on to outperform the S&P 500 by 14% over the following year... while the stocks he said to sell or avoid dropped 32% on average.

Marc will unveil all the details next Thursday night. And when you reserve your spot now, you'll also get the names of three stocks that Marc believes are election "ticking time bombs."

Click here to sign up now.

Now, let's dig into the Q&A... As always, keep sending your comments, questions, and topic suggestions to [email protected]. My team and I really do read every e-mail.

Q: If I'm trying to buy a new car and looking at all the different reviews, how do I know which to really follow? The types of highly rated cars can vary a lot depending on the magazine/organization. – L.H.

A: We're turning this question over to our in-house auto expert, Brady Holt...

I'm not surprised to see different reviewers make different judgments about what makes the best car. Some will focus on sporty performance... Others will prioritize cutting-edge technology... Some ignore price...

What matters to me is why a car is highly rated – reviewers will all explain why a given car rises to the top in their estimation. You can see if your reaction to the review is "that car checks my boxes" or "oh, this writer prioritizes things I don't care about."

As far as choosing which reviewers to trust, I like to look up what a particular website or magazine has said about a car that I know well and feel strongly about. You might look up what the reviewer said about your own current car (ensure it's the same year, make, model, and engine) and gauge whether it matches your experience. For myself, I typically choose a car I know that I don't like... That way, I'll know if a reviewer is willing to be honest.

Another thing that I find helpful is when reviews make explicit comparisons between two or more different competing cars. When done right, these comparisons help a car's pros and cons show up in sharper relief. They also force reviewers to properly evaluate a car in its context... It's otherwise easy to unjustly praise it or unfairly malign it. (For instance, the least roomy minivan still has lots of space and the quickest subcompact economy car can still be slow.)

You can also write to me directly: [email protected]. I'll be happy to share my thoughts on the best cars to consider.

Finally – and I say this as a car reviewer myself – don't let someone else choose your car for you. Use reviews and other advice to help you identify cars that are worth a test drive... to flag things you should watch for while you're taking your drive... and provide context for your own impressions. Then pick for yourself.

What We're Reading...

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
February 23, 2024