Presidential Elections and the Stock Market: Buckle Up, It’s Gonna Get Bumpy

Presidential Elections and the Stock Market: Buckle Up, It’s Gonna Get Bumpy

Ah, the U.S. presidential election cycle—where half the country thinks we’re about to usher in a golden age of prosperity, and the other half thinks the world is ending. Meanwhile, the stock market is over here having a full-blown identity crisis, trying to figure out if it should celebrate, panic, or just pretend it doesn’t care.

Come with me and see how a presidential transition typically affects the stock market, without the political bullshit. Because if there’s one thing history teaches us, markets don’t care about your feelings—they care about money. God bless America, and God bless capitalism!

Step 1: The Election Year Rollercoaster

Presidential election years tend to follow a pretty chaotic script, much like a Michael Bay movie—really loud, sometimes obnoxious, and nobody really knows what’s going on.

Volatility is the Name of the Game

• Markets hate uncertainty, and elections are the definition of uncertainty.
• Traders start overanalyzing every poll like it’s the damn Super Bowl.
• Media outlets scream about how “THIS ELECTION WILL CHANGE EVERYTHING,” which is mostly nonsense.

Example:

The S&P 500 historically gets choppy AF in the months leading up to an election. Big money is waiting to see who wins and what policies they’ll push, which means investors are hesitant to make big moves.

Step 2: Post-Election Panic (or Partying?)

Once a new president is elected (or the current one gets re-elected), markets usually react one of two ways:

• The “Oh God, Sell Everything” Reaction:
  • Investors freak out because the “wrong” candidate won (spoiler: this happens every time, no matter who wins).
  • Stocks drop, people panic, and some guy on TV starts yelling about gold.
• The “Let’s Pretend We Knew This Was Coming” Reaction:
  • Markets stabilize, and big investors start moving money around based on the new policy expectations.
  • If Wall Street likes the president’s stance on corporate taxes, infrastructure spending, or regulation, stocks rally.
  • If not, well… the market sulks like a toddler who dropped their ice cream cone.

Example:

• Obama’s Election (2008): Market dropped at first—because, you know, THE FINANCIAL CRISIS WAS HAPPENING—but then rebounded like crazy.
• Trump’s Election (2016): Futures crashed overnight, then the market ripped higher the next day.
• Biden’s Election (2020): Markets were shaky leading up to it, but once it was clear stimulus checks were coming, the rally kicked in.

Moral of the story? The market usually freaks out for a minute, then remembers it only cares about profits (like a true American).

Step 3: The First Year “Reality Check”

Once the new president actually starts doing things, Wall Street figures out if they were right or wrong about their initial reaction.

• What Usually Happens?
  • If the new president pushes corporate-friendly policies → Markets go up.
  • If there’s a major shakeup in taxes or regulations → Markets get grumpy.
  • If Congress blocks everything → Stocks basically ignore the president altogether.

• Example:
  • In 2017, markets loved Trump’s corporate tax cuts → Stocks soared.
  • In 2009, Obama’s stimulus package helped boost confidence → Stocks rebounded hard.
  • In 2021, Biden’s infrastructure bill pumped money into certain sectors → Cyclical stocks and green energy popped off.

But here’s the thing: presidents don’t control the stock market.

Step 4: Does It Really Matter in the Long Run?

If you zoom out and look at long-term market performance, you’ll see that the stock market doesn’t give a damn who’s in charge over the long haul.

Fun Facts:

• The S&P 500 has gone up under EVERY president since World War II (some more than others, but still).
• The market cares way more about interest rates and corporate earnings than whoever’s sitting in the Oval Office.
• Historically, the third year of a presidency is the best for stocks—because by then, all the big scary changes are priced in and Wall Street stops panicking.

Example:

During Reagan, Clinton, Bush, Obama, Trump, and Biden—markets had good years and bad years, but long-term investors still made money.

The Bottom Line: Should You Change Your Investments Based on Elections?

Short answer: No.

Slightly longer answer: Maybe tweak your allocations a little, but don’t panic and sell everything just because a new president is coming in.

What Smart Investors Do:

✅ Stay diversified (stocks, bonds, commodities—don’t go all-in on one bet).

✅ Watch policy changes that could impact certain industries (energy, healthcare, defense).

✅ Ignore the media hype and focus on company earnings, economic data, and interest rates.

✅ Buy the dip when the market inevitably freaks out for no reason.

What Dumb Investors Do:

❌ Sell all their stocks because their candidate lost.

❌ Panic-trade every time a new policy is announced.

❌ Listen to random Twitter gurus who promise the market will “collapse” if a certain president wins but their strategy will make you money(seriously anyone guaranteeing returns like that is trying to FLEECE THE SHEEP).

❌ Sit in cash forever because “this time is different.” Spoiler alert, it’s not and inflation is ALWAYS a thing. 

Look, presidential elections are great for headlines, but not great reasons to mess with your portfolio. If history has taught us anything, it’s that the market is bigger than politics.

So unless the new president plans on banning capitalism (which, let’s be honest, probably isn’t happening), just stay the course, manage your risk, and keep stacking those tendies.

Happy Trading,

The SignalCraft Master Trader

P.S. Want AI-driven stock picks that don’t care who’s president? Our premium service analyzes data, not politics. Sign up today!

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