It’s common for investors to link their views on the stock market’s future to how much they like—or align with—a particular president. However, the data suggests otherwise.
When we break down presidencies based on their average Gallup approval ratings, an interesting pattern emerges: the four most popular presidents saw average annualized stock market returns of 10.6%, while the four least popular presidents saw returns of 10.4%. That’s almost identical—proving that approval ratings or personal preferences have little to no impact on market performance.
Here is another example. Without seeing the data below, if you had to guess on the spot whether JFK or Gerald Ford had better stock market performance during their presidency, I promise you, most of you would have said John Kennedy – myself included. But the truth? Ford nearly doubled JFK’s average annualized return.
These examples highlight the importance of recognizing our political biases and separating them from our investment strategies. Disliking a president or disagreeing with a party’s policies doesn’t mean we should abandon our financial plans. Staying the course and focusing on long-term goals, rather than reacting emotionally, is key to successful investing.
