June 2024 Market Update

On June 3, The Wall Street Journal headline proclaimed “Mexico Ruling Party’s Election Sweep Spooks Markets.” This is a classic example of market participants speculating about the future with little data to back up their bet. With important elections happening in many countries this spring (India, South Africa, and the U.K., to name a few) and this fall in the U.S., it seems like a good time to remind ourselves what the data says about the influence the ruling party has on stock markets.

While it may disappoint devotees of either party, two things are clear in the data from the U.S. First, on average stock markets go up regardless of the president’s party or the congressional majority. Second, how much they go up or down is also not related to these factors. Data is not readily available in every country, but the trends have played out the same in the U.K. over many years.¹ We would postulate that this result is because human beings and the companies they build are fundamentally driven to create value for themselves and are quite adaptable to changing political winds and policies. The path can be bumpy, especially when things shift quickly or dramatically, but over the long run the drive towards value creation is strong. We believe that investing in companies across the globe over the long term will yield positive returns, and there is nothing to be gained by shifting strategies based on actual or predicted election outcomes.

¹ UK General Election – how will it impact stock markets in 2024?, Anne Fairweather. Hargreaves Lansdown, May 30^th, 2024. https://www.hl.co.uk/news/uk-general-election-how-will-it-impact-stock-markets-in-2024

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.