Bull & Baird: Elections and You
Let's begin with a basic question: Do elections matter?
Without a doubt. They influence taxes, national security, the judiciary, redistricting, healthcare, and a host of social issues.
But when it comes to your portfolio, elections tend to matter a lot less than the headlines suggest. What we really want to focus on is what makes stocks go up over time and that is American innovation.
Electricity, the microchip, the iPhone, the internet. Those are the things that were happening in the background while we debated polls and congressional seats.
Let me show you what I mean with a recent example.
Think back to 2022. Inflation was surging, stocks were in a bear market, and bonds, the traditional safe haven, offered little shelter. Portfolios took a beating across the board. Not surprisingly, economic confidence cratered, and voters responded. The 2022 midterms and the 2024 presidential election both shifted the balance of power in Washington.
Here is what the stock market did along the way:
2022 -18%
2023 +26%
2024 +25%
2025 +17.8%
2026 +11% (through Oct 1)
Was it those elections, and a change in the political climate, that caused the market to surge over the past few years? Well, markets rise and fall for a variety of reasons, but I’d like to point to one thing which is driving a big part of the gains.
In November 2022, Open AI gave birth to what we now call Chat GPT. In March of 2023, Claude was born. In November 2023, Grok launched. In December 2023, Gemini arrived.
The dawn of AI arrived in a chat window, and almost no one realized what it would mean for their investments. Since then, the US stock market is up 100%.
Those companies were building AI for years regardless of the makeup of Congress or who the president was. Just like Starbucks was coming up with new coffee, Taco Bell was creating new burritos, and Disney was rebooting Star Wars for the 80th time.
That won’t change after November of this year. In fact, it will never change because that’s what we do in the United States. We create companies, products, and technologies that not only alter the course of human history but allow investors to grow and compound their wealth.
So back to where we started. Do elections matter? Absolutely. Vote. Care. Argue about it at Thanksgiving if you must.
But do they matter to your portfolio? A lot less than the next few weeks of TV will tell you.
Somewhere right now, an engineer is building something none of us have heard of yet. She doesn't know who's going to win in November. Neither does your financial plan, and that's the point.
If the noise gets loud, talk to your advisor, revisit your purpose, and go for a walk.
But remember, no matter who wins in November, the people building the future will still be the ones growing your wealth.
The information reflected in this post is an opinion and subject to change. Past performance is not a guarantee of future results. Diversification does not ensure profit or protect against loss. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances. Speak to your Baird Financial Advisor before making investment decisions.
