Attention market timers: It's an election it time to act?

S.F. Ehrlich Associates |

We’re not sure there are any more ways to write that market timing doesn’t work, despite the market timing success of your (feel free to fill in the blank with brother-in-law, co-worker, neighbor, or daughter-in-law). As this is an election year, however, you may be convinced that knowing who will win in November will give you a leg-up in the competition (e.g., other investors).

Alas, while that may be true, it’s apparently not. As shown by the two graphs below from Dimensional1, there is a scant difference between market performance and whichever party is in the White House. Similarly, there is a scant difference between market performance and which political party controls Congress.

In fact, the most important issue in determining whether the stock market will rise or fall is corporate profits. If companies make more money, their stock price should go up. In addition, if investors believe publicly traded companies will earn even more money in the future, that should drive their stock prices even higher.

Regardless of your political leanings or affiliation, if your party wins, don’t assume that’s a good thing for the stock market. Neither should you assume that the stock market will go down if your party loses. As we have learned over the past 100 or so years, it’s all about money (e.g., profits).



1 “Market Returns During Election Years.” Dimensional, Jan. 2024.


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