Is the market doomed under Biden?
A change in the presidential party in the United States did little to change the direction of the market in 2016 and investors should be wary of making any knee-jerk investment decisions based on political assumptions, according to Wealth Within.
Dale Gillham, Wealth Within chief analyst, said during Trump's reign the Dow Jones Index grew over 50% and the question that needed to be asked was whether the current bull market would continue during the Biden administration.
“While we could debate for hours the performance of the stock market under each political party, right now the statistics are inconclusive,” Gillham said.
“That’s because under the Democratic led Obama presidency, the Dow Jones also rose over 50%.
“It may surprise you to know that the statistics are very similar to Australia as to whether the market performs better under a Liberal or Labour government.”
According to FE Analytics, during the (one term) Trump presidency, the NASDAQ 100 157.94%, the S&P 500 returned 75.71% and the Dow Jones Industrial Average returned 67.15%.
During the (two term) Obama presidency, where Joe Biden served as Vice President, the NASDAQ 100 returned 323.62%, the S&P 500 returned 191.55% and the Dow Jones returned 168.23%.
During the George W. Bush presidency, also two terms, the Dow Jones lost 23.72%, the S&P 500 lost 41.22% and the NASDAQ 100 lost 62.76%.
Performance of major US indices during Trump presidency
“So, if the government of the day does not indicate how well a market performs, how do investors ensure they are investing at the right time so they can be profitable?” Gillham said.
“Broadly speaking, there is no real good or bad time to be in the stock market, there are just better times to be in or out of the market.
“While it makes sense to be in the stock market when it is rising and to be out during times like the GFC [Global Financial Crisis] or other market crashes, I would argue that for investors to continually make money, it is not about being in during good times or out during bad times, but rather having the right attitude towards investing.”
Performance of major US indices during the Obama presidency
Gillham said regardless of how much research is done by an investor, their inability to consistently profit comes done to the “fears they hold”, whether it is the fear of losing, the fear of being wrong or the fear of missing out.
“Therefore, while there are macro-economic factors at play right now like the US Presidency, the COVID-19 pandemic and the strained Australian/Chinese relationship, investors who have the right attitude will always profit more than those who do not,” Gillham said.
Performance of major US indices during the Bush presidency
AUTHOR
Chris Dastoor
Recommended for you
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
Responsible investment performance concerns have lessened as the market hits $1.6 trillion in AUM, according to RIAA’s annual report, but greenwashing fears among asset managers are on the rise.
Research by Morningstar has found fixed income funds are bucking a general trend around managed fund fee dispersion with a smaller fee dispersion compared to equity ones.
As investors seek to diversify their portfolios, the naming of bond labels has broadened out to include green, social and impact bonds, according to the annual RIAA report.
