When a presidential inauguration occurs, the temptation to trade based on the day’s symbolism and emotion is strong. Optimists may expect the market to rally under the new administration, while pessimists brace for a downturn. But history tells us a different story.
We analyzed 13 inauguration days since 1970, and the data is clear:
Returns on inauguration day and the day after are no better than any random day in the market.
Extending the horizon to one-month post-inauguration, the market’s performance remains indistinguishable from any one-month period in history.
Why does this happen?
Because the market doesn’t care about emotions tied to political loyalties. While investors may feel high conviction on these days—whether optimistic or pessimistic—the reality is that markets are forward-looking. They’ve already priced in expectations for the new administration well before the ceremonial oath is taken.
The Takeaway: Don’t let emotions guide your trading decisions around inauguration days. Trading based on your political viewpoints—positive or negative—could lead to disappointment.
