POLITICS, STOCKS AND YOUR PORTFOLIO As we move full swing into the presidential election year, are you wondering how the stock market will fare? We can’t predict the future, but we thought you might enjoy a glimpse of what the past has offered for election year returns. Election year performance trivia The table in the left-hand column shows S&P 500 Index stock market returns during election years from 1928 through 2012. Of the 22 election years shown, 18 had positive returns and only 4 had negative returns. The election year with the highest return was 1928 (Hoover vs. Smith), with a return of 43.4%.
S&P 500 STOCK MARKET RETURNS DURING ELECTION YEARS Year
Total return (%)
Candidates
1928
43.4
Hoover vs. Smith
1932 1936 1940 1944 1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016
-5.3 32.5 -10.1 19.6 5.0 18.5 6.6 0.5 16.3 11.0 18.9 23.6 32.2 6.1 16.3 7.6 22.8 -9.1 10.8 -37.0 15.7 ?
Roosevelt vs. Hoover Roosevelt vs. Landon Roosevelt vs. Wilkie Roosevelt vs. Dewey Truman vs. Dewey Eisenhower vs. Stevenson Eisenhower vs. Stevenson Kennedy vs. Nixon Johnson vs. Goldwater Nixon vs. Humphrey Nixon vs. McGovern Carter vs. Ford Reagan vs. Carter Reagan vs. Mondale Bush vs. Dukakis Clinton vs. Bush Clinton vs. Dole Bush vs. Gore Bush vs. Kerry Obama vs. McCain Obama vs. Romney Clinton vs. Trump
Source: Copyright 2016 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at www.ndr.com/copyright.html. For data vendor disclaimers refer to www.ndr.com/vendorinfo/.
The market landscape alongside the politics Generally, investors haven’t suffered big losses during election years. However, the market did decline as recently as the 2008 presidential election. In that election year (Obama vs. McCain), the market returned -37%. While historical analysis offers an interesting snapshot, it’s important to remember that each election year brings its own unique characteristics. Currently, the economic outlook for 2016 holds a tremendous amount of uncertainty with many factors ranging from global economic growth to geopolitical unrest. In addition, divergent central bank policies around the world and lower oil prices are factoring into global markets. All of these factors can potentially have a bigger impact on the market and your portfolio than the presidential election itself.
Politics and your portfolio The political environment and upcoming election can certainly influence the stock market, as ultimately the president plays a crucial role in directing the nation’s economic policy, tax rates, budgets, etc. But making any financial decisions based on election year market cycles is not a prudent investment strategy. Work with your financial professional and stick with your asset allocation strategy to stay on track to achieve your goals.
About Columbia Threadneedle Investments Columbia Threadneedle Investments is a leading global asset management group that provides a broad range of investment strategies and solutions for individual, institutional and corporate clients around the world. With more than 2,000 people, including over 450 investment professionals based in North America, Europe and Asia, we manage $460 billion* of assets across developed and emerging market equities, fixed income, asset allocation solutions and alternatives. We are the 13th largest manager of long-term mutual fund assets in the U.S.** and the 4th largest manager of retail funds in the U.K.*** Our priority is the investment success of our clients. We aim to deliver the investment outcomes they expect through an investment approach that is team-based, performance-driven and risk-aware. Our culture is dynamic and interactive. By sharing our insights across asset classes and geographies, we generate richer perspectives on global, regional and local investment landscapes. The ability to exchange and debate investment ideas in a collaborative environment enriches our teams’ investment processes. More importantly, it results in better informed investment decisions for our clients.
To find out more, call 800.426.3750 or visit columbiathreadneedle.com/us Past performance is not a guarantee of future results. The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Columbia Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results and no forecast should be considered a guarantee either. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that any forecasts are accurate. The Standard & Poor’s 500 Index (S&P 500 Index) is an unmanaged list of common stocks that includes 500 large companies. It is not possible to invest directly in an index. * In U.S. dollars as of June 30, 2016. Source: Ameriprise Q4 Earnings Release. Includes all assets managed by entities in the Columbia and Threadneedle group of companies. Contact us for more current data. ** Source: ICI as of June 30, 2016 for Columbia Management Investment Advisers, LLC. *** Source: Investment Association as of March 2016 for Threadneedle.
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