Markets generally rise over the long term, but does the political affiliation of presidents matter to your stock portfolio?
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To answer this question, GOBankingRates spoke with two financial experts on how investors should navigate markets when the White House changes hands.
While past performance is not indicative of future results, the stock market has generally performed better under Democratic presidents. Not because they’re more market-savvy, but rather due to timing — specifically, where the economy stands in the business cycle.
According to TD Economics, Democratic presidents have had the benefit of getting elected during the early stages of the economic cycle more often. By contrast, Republican presidents, historically, assumed office near the end of the cycle.
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To be clear, this is not to suggest markets always perform better under Democrats or poorly under Republicans. In fact, the S&P 500 delivered remarkable returns during Dwight Eisenhower’s presidency and Donald Trump’s first term (both Republican).
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Under the Biden administration, the S&P 500 appreciated by 55%, based on a report from Morningstar. Not bad, considering he took the helm during a once-in-a-lifetime global pandemic that catalyzed a total upheaval across virtually every supply chain.
Meanwhile, the tech-heavy Nasdaq Composite delivered a gain of 46%.
In 2021, which marked nearly one year of Biden’s term, the S&P rose nearly 27%, while the Nasdaq gained about 21%, per CNBC.
Markets have been a roller coaster since Trump took office. The S&P 500 reached an all-time high in mid-February, but his controversial tariffs and, more recently, tensions in the Middle East derailed whatever momentum there was.
From Trump’s inauguration on Jan. 20, 2025, through June 26, 2025, the S&P 500 has grown just 1.52%, while the Nasdaq has grown by 2.08%.
Linda Jensen, a chartered financial consultant from Heart Financial Group, believes there is no reason to panic — as long as you stick to a long-term approach.
“First, I remind clients that markets dislike uncertainty — but trying to time the market based on politics often leads to missed opportunities,” she said. Instead, Jensen reorients her clients to think about why they’re investing in the first place and what their goals are: “I always bring the conversation back to goals, time horizon and risk tolerance,” she explained.
