Will President Biden Sink The Stock Market?

President Biden has proposed trillions of dollars in stimulus spending and a hike in taxes on corporations and the wealthy. Anyone who is paying attention is expecting this to result in inflation.

In a recent media interview, I was asked about all this and what steps investors should take as the Biden presidency moves from its infancy.

Smile, Politician, Man, Adult, Male, Joe Biden, Cut Out

Image Source: Pixabay

The answer is none.

It’s easy to get worked up when a new president takes office – excited about all the amazing things they’re going to do or fearful of all the terrible things – and make investing decisions based on where you stand.

But the reality is you should do absolutely nothing, regardless of your political stance.

The reason? The president of the United States has little effect on the stock market.

Don’t believe me?

After two terms in office, which president do you think had the best market returns?

It may surprise you that it was Bill Clinton, followed by Barack Obama.

Stock Market Performance by President: Two Terms

The top five market returns after eight years in office belong to Clinton, Obama, Ronald Reagan, Dwight D. Eisenhower and Franklin D. Roosevelt. See a pattern?

There is none. We have two Democrats, followed by two Republicans, then another Democrat. George W. Bush is the only president to have a negative stock market return over a full two terms.

Let’s look at performance over one term…

Stock Market Performance by President: One Term

After four years, the top five were FDR, Clinton, Calvin Coolidge, Obama and Eisenhower. Two Democrats, followed by a Republican, a Democrat and a Republican.

Again, no pattern – including when you look at all of the presidents.

When examining market performance by which political party has been in the White House over the past 75 years, we can see that Democrats average a 9% annual total return, while Republicans average 7.4%.

The best performance was when a Democrat was in the White House and Congress was either split or controlled by Republicans.

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