The phrase above is one that was coined by  James Carville in 1992. Carville was a strategist in Bill Clinton's successful 1992 U.S. presidential election against incumbent George H. W. Bush. His phrase was directed at the campaign's workers and intended as one of three messages for them to focus on. It should also be a phrase for investors to remember in the period following a Presidential election.
In 1996, following a period of service in the USAF and participating in the turnaround of several successful small business ventures, I entered the financial advisory profession. I embarked upon this life changing journey thinking it meant I would spend most of my time doing research and analyzing investment opportunities. In the 28 years since I have certainly done my fair share of research. But looking back, probably 50% of the time has also been spent helping clients better understand the economic and political landscape and come to terms with changes, that at the time, seem like major roadblocks, but in hindsight are mere speed bumps on the path to continued prosperity.
As a financial advisor, at times I have also been called upon to be a psychologist, a therapist, a marriage counselor, a confidant, and on at least one occasion, hold an intervention. Following the recent Presidential election, I find myself once again serving in similar roles. Since November 5th I have had discussions with clients who are alternately thrilled and despondent. Some see the future as bright and promising, while others see the same period as bleak and uncertain. A few that fall into the latter category have even asked whether I can still be their portfolio manager when they move to Canada.
To each of the clients I have offered the same message: “Keep Calm and Carry On”. Though the actions of the occupant of the Oval Office have the potential to impact many facets of life for Americans, as well as the citizens of many foreign nations, the reality borne out by history is that for equity investors, the Oval Office doesn’t really matter much. Looking at the research, the S&P 500 index has risen during 17 of the last 20 four-year presidential terms. (1)
I’ve also recently had questions from clients regarding whether the investment markets are impacted favorably or unfavorably when the government is unified or divided. A unified government is defined as the same party controlling both the Presidency and Congress, and a divided government is when control amongst the two branches is split between the parties. One study, which analyzed the period from 1926 to 2023, found we had an equal number of years of unified government and divided government (49 years each).
This research showed that during that span of time, there was barely any statistical difference in the annual average return of the S&P 500 under a unified Republican party or unified Democrat party government. There were 13 years of unified Republican government during which the average annual return of the S&P 500 was 14.52%. While during the 36 years of unified Democrat controlled government, the average annual return was 14.01%. (2)
A second study, covering the period from 1951 to 2023, had a slightly different result. There were 30 years during that span of time in which one party controlled both branches of government. During the 20 years of Democrat controlled government the average annual return of the S&P 500 was 8.6%, and during the 10 years of Republican controlled government the average annual return was 6.7%. However, during the 43 years of the study period when the government was divided, the average annual return was 9.9%. (3)
Regardless which study you look at across multiple decades, the important take away is that in every single scenario, the equity market continued to perform well over the longer term. It’s not who controls the branches of government that ultimately determine the total return of the investment markets, it’s the economy.
In the last 15 years, the U.S. economy has only seen two recessions (2007-2009) and (2020). Both were brief and one was brought on by the housing crisis and the other due to Covid. Based on history, we could be due for a more prolonged and deeper downturn, but the current economic indicators don’t point to an imminent recession.
My advice is you shouldn’t make investment decisions based on who the President happens to be or who controls which house of Congress. Successful investors focus on the long-term and stick with the asset allocation strategy developed in concert with their financial advisor and based on their specific risk tolerance, time horizon and retirement goals. 
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