Inflation! Jobs! Deficits! Tariffs! Regulation! Tax cuts! Tax hikes!
Yes – there are plenty of economic questions to worry about when it comes to the 2024 election – and that’s aside from which candidate is getting shot at and which is confusing his opponent with his running mate.
So what does all the outsize election drama mean for stocks?
Nada.
Stocks typically surge in the back halves of election years. Wild and wacky won’t change that. Party, personality – and yes, even potential economic policies – also aren’t key.
Falling uncertainty is. Before you call me wacky (which I always embrace), let me explain.
My 2024 forecast showed you election years are typically strong for stocks, with 11.4% average S&P 500 returns since 1925. But averages aren’t ceilings. Election year’s stocks are normally back-end-loaded with low first-half returns, back halves three times higher.
Fact: that includes 15 positive first halves. Only one, 1948, saw a negative second half. Only one. Those second halves averaged 8.9%.
Why? The nearing election reduces uncertainty. Stocks always love that. Election year uncertainty reigns early. Myriad candidates can clog primaries, playing to their bases, touting scary views.
Not in 2024. The Trump-Biden rematch was destined early on – an early certainty that was unusually high for any election year. So, in 2024 stocks soared early.
(Recall that the Democrat’s 2020 race only coalesced when Biden’s Super Tuesday surge flipped fortunes. A packed 17 candidate 2016 GOP primary herd couldn’t fit on a debate stage. Bernie bros made Democrat primaries contentious until June.)
Can debate stumbles, assassination attempts and more stoke second-half uncertainty? Maybe, but unlikely. Post-debate, poll numbers stabilized fast. Post assassination attempt? Stocks kept rising.
That said, we will probably see a tight final race. Biden’s debate flub and initial poll drop didn’t boost Trump’s numbers but those of third parties. When voting finally comes, third party numbers routinely fade. Increasingly, prior protest voters conclude they want their vote to actually count. Those previously inclined to Biden hate Trump too much to switch to him. In the end most will revert to Biden.
Still, Biden’s debate flub has Democrats on defense in states they assumed were safe: Minnesota, New Jersey, New Hampshire, Maine, even Virginia. They have sufficient cash for TV and direct mail blitzes there.
But the harder, more crucial campaigning tactic remains: building new, late-stage ground games—skilled crews and recruiting to get out their marginal voters in those states. Democrats seemingly have a much more resource-intensive effort ahead than they suspected pre-debate—partly explaining their post-debate panic.
That distracts from where it matters most: the six traditional swing states: Arizona, Georgia, Michigan, Nevada, Wisconsin….and especially Pennsylvania. The best new website for market analysis, by far, is: 270toWin.com. It lets you play “what if” games unlike any prior website (and no — I’ve got no relationship with them, financial or otherwise, other than being an avid user).
November remains a ways off. It is all about who wins 270 or more Electoral College votes. I think you’ll see if you “what if” at 270toWin.com, that Biden’s only real path to victory runs through Pennsylvania. Biden may win much more and win … or lose, but Pennsylvania is key.
Trump pretty well had 235 EC votes locked up months ago. If he wins Pennsylvania he almost certainly wins Georgia, a more Republican state. That gets him to 270 and the presidency.
Post-election? Stocks’ 2025 political impact hinges on the government we get, including House and Senate. Not whether the GOP or Democrats triumph, but whether golden gridlock continues.
I have told you many times legislation — not party affiliation — is what matters to stocks. Gridlock squashes market-menacing bills, helping stocks soar — like in 2023 and 2024. It is too early to know that for 2025 – but it is 2025’s key.
For now, enjoy far-flung histrionics and a great stock market 2024. Wackiness won’t go away. But the bull market should thrive through 2024.
Ken Fisher is the founder and executive chairman of Fisher Investments, a four-time New York Times bestselling author, and regular columnist in 21 countries globally.
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