Volatility has already sharply increased in the markets, sticking to a 90-year-old pattern. However, due to the fact that each year is different, this time, pre-election volatility is extremely high, as the pandemic in America is out of control and it is now doubtful whether the growth rate of the economy can be maintained, especially that a fiscal support package has not been voted yet.

According to the above graph, in the long term, Presidential elections do not change the flow of things and markets move upwards. Since 1929, the annual average growth rate of S&P 500 is about 10,5%. One dollar ($1) invested in S&P 500 back in 1950 for example, today could have given $16866.

Bonds’ returns have also been positive all those years with an annual average of 7,1%. Since the pandemic has significantly increased government bond issues in order to finance deficits, this trend would be hard to reverse in the next years.

From the above graphs becomes clear that Donald Trump’s presidency can be characterized as one of the most turbulent as far as the stock market is concerned, at least during the last 30 years. According to VIX index, since 1990, whoever President took over, with the fear index moving higher than the current 37, this either coincided with a bullish bottom and a new strong rally, or it coincided with a bear market bottom and eventually led to a long- term bull market.

The following chart is a final confirmation that in the long term, markets are performing extremely well under any Presidency.

Historical Average Performance of Pre-Election Years