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.
What the Past Tells Us
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.
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 President Dwight Eisenhower’s presidency and President Donald Trump’s first term, both Republicans.
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President Biden’s Performance
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.
President Trump’s Performance (So Far)
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 2.41%, while the Nasdaq has grown by 2.74%.
What Do the Experts Think?
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.
Matt Hylland, a financial planner at Arnold & Mote Wealth Management, shared a similar sentiment: “Stock markets have rewarded long-term investors, regardless of which party is in the White House.” Hylland advises his clients to focus on what they can control, like having a diversified portfolio and a tax-efficient savings strategy.
What’s Next for the Market?
Jensen also weighed in on where markets could be headed, based on a wide range of factors. Best-case scenario, some of Trump’s policies, including the extension of tax cuts, expanded asset depreciation and the introduction of a $15 million estate exemption, might spark new optimism among investors and the business community, which may drive markets forward.
Conversely, Jensen warned that “global tensions, interest rate movements and inflation data will still weigh heavily on performance.”
But the bottom line? While elections matter, both experts contend that a long-term investment plan is the best way to stay on track, irrespective of who occupies the White House.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
