FROM OUR INVESTMENT COMMITTEE: What History Tells Us About the Market and Control of US Congress
MODERNIST’S ASSET CLASS INVESTING PORTFOLIOS ARE STRATEGICALLY INVESTED WITH A FOCUS ON LONG-TERM PERFORMANCE OBJECTIVES. PORTFOLIO ALLOCATIONS AND INVESTMENTS ARE NOT ADJUSTED IN RESPONSE TO MARKET NEWS OR ECONOMIC EVENTS; HOWEVER, OUR INVESTMENT COMMITTEE EVALUATES AND REPORTS ON MARKET AND ECONOMIC CONDITIONS TO PROVIDE OUR INVESTORS WITH PERSPECTIVE AND TO PUT PORTFOLIO PERFORMANCE IN PROPER CONTEXT.
HYPOTHETICAL GROWTH OF $1 INVESTED IN S&P 500 INDEX, January 1, 1926–June 30, 2022
Despite what you may hear on social media or from your neighbor, nearly a century of U.S. stock market returns suggests that making investment decisions based on control of the chambers of Congress is unlikely to lead to better investment outcomes.
From 1926 to 2022, stocks trended higher regardless of whether Democrats or Republicans controlled the House and the Senate, or whether control was mixed.
Actions by Congress and the other branches of the federal government may impact returns, but other factors like geopolitical events, interest rate changes, and technological advances do, too. Decades of research suggest that current market prices incorporate all of this information.
Shareholders invest in companies, not a political party, and companies focus on serving their customers and growing their businesses, regardless of what happens in Washington.
Stocks tend to reward disciplined investors no matter who has the upper hand in the House and Senate—a useful lesson about the benefits of a long-term investment approach.
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