Inflation! Jobs! Deficits! Tariffs! Regulation! Tax cuts! Tax increases!
Sure, there are plenty of economic issues to worry about when it comes to the 2024 election, but that’s separate from which candidates are being attacked and who’s confusing the running mate with the running mate.
So what does this massive election drama mean for the stock market?
Nada.
Stocks typically soar late in election years. No amount of outlandish behavior will change that. The parties, the people, and even the potential economic policies don’t matter.
Uncertainty is down. Before you call me a weirdo (which I always welcome), let me explain.
My 2024 forecast showed that stocks do well in election years, with the average return of the S&P 500 Index since 1925 being 11.4%. But the average is not an upper limit. Election year stocks are typically concentrated in the second half, with lower returns in the first half and triple the returns in the second half.
Fact: 15 of those years had a positive first half. The only year with a negative second half was 1948. Just one year. The average for that second half was 8.9%.
Why? Uncertainty decreases as an election approaches. The stock market always welcomes that. Uncertainty reigns early in an election year. Countless candidates may disrupt primaries, appeal to their supporters, and promote frightening views.
Not so in 2024. A Trump-Biden rematch was doomed early on, an unusually early certainty for an election year, which is why stocks surged early in 2024.
(Remember, the 2020 Democratic race only came together when Biden’s Super Tuesday surge transformed its fortunes. The 2016 Republican primary packed 17 candidates but couldn’t fit them on the debate stage. The Bernie Bros kept the Democratic primary contentious until June.)
Would a stumble in the debate, an assassination attempt, etc. fuel uncertainty in the second half of the year? Possibly, but unlikely. After the debate, the poll numbers stabilized quickly. What about after the assassination attempt? Stocks continued to rise.
That said, the final selection will probably be close. Biden’s debate gaffes and initial poll dip didn’t boost Trump’s support, but boosted third party support, which always drops as election day approaches. People who used to vote in protest are more likely to decide that their vote actually counts. People who were previously leaning to Biden hate Trump too much to switch to him. In the end, most will go back to Biden.
Still, Mr. Biden’s debate gaffes have put Democrats on the defensive in supposedly safe states of Minnesota, New Jersey, New Hampshire, Maine and even Virginia, where they have ample funds to mount a television and mail-order offensive.
But the harder, more important campaign tactic remains: building a new late-stage ground game, hiring skilled staff and recruiters to woo close voters in these states. Democrats appear to be holding back on an effort that will require far more resources than they expected before the debate, which explains part of the post-debate panic.
This distracts from what matters most: the six traditional battleground states of Arizona, Georgia, Michigan, Nevada, Wisconsin, and especially Pennsylvania. Here are the best new websites for market analysis so far: 270toWin.comIt lets you play a “what if” game unlike any other website ever (though I have no affiliation with the site, financial or otherwise, other than being an avid user).
November is still a long way off. What matters is who gets 270+ electoral votes. If you play “what if” on 270toWin.com, you’ll see that the only real path for Biden to win is through Pennsylvania. Biden may win with more votes, or he may lose, but Pennsylvania is key.
Trump nearly secured 235 electoral votes from the electoral college a few months ago, and a win in Pennsylvania would almost certainly guarantee him a win in heavily Republican Georgia, giving him 270 electoral votes to take the presidency.
After the election? The political impact of stocks in 2025 will depend on the success or failure of the administration, including the House and Senate — not whether Republicans or Democrats win, but whether the gold stalemate continues.
As I’ve said many times before, it’s the laws, not the parties, that matter to stocks. Impasse kills market-threatening legislation and helps stocks soar like they will in 2023 and 2024. It’s too early to tell for 2025, but that will be key for 2025.
For now, enjoy the mayhem and a strong stock market in 2024. The wackiness won’t die down, but the bull market should continue through 2024.
Ken Fisher is founder and chairman of Fisher Investments, a four-time New York Times bestselling author and writer of regular columns in 21 countries around the world.
