Deadlines, Elections, and Markets

Exhibit 1.

Exhibit 1.

Hardly a day goes by lately that one of the candidates for President (okay, mostly just one of the them) doesn't do or say something that makes you shake your head. Just this week, the "Donald" got confused and encouraged a group of Florida voters to head to the polls on November 28, only three weeks after the actual election! 

To help you avoid being disenfranchised, or worse, here are a couple of important upcoming dates to keep in mind:

Monday, October 17 – There are a number of deadlines next Monday.

Final Deadline for Individual Federal Income Tax Returns: nationwide final deadline for filing an individual federal income tax return for tax year 2015 after having filed for an extension. Extensions also apply to:

  • Removal of Excess Contributions and Roth IRA Conversion Recharacterization: last day to remove excess retirement contributions or to recharacterize a Roth IRA conversion from 2015.
  • SEP and SIMPLE IRA Contributions: 2015 contributions for Qualified Retirement Plans (QRP), Simplified Employee Pension Individual Retirement Account (SEP IRA), and Employer Savings Incentive Match Plan for Employees (SIMPLE) IRA.

If you have questions about these retirement issues, get in touch today to discuss your situation.

Tuesday, November 8 – Election Day, even in Florida.

Understandably, the election is causing consternation for many of the folks I talk to.  Elections add uncertainty, and uncertain markets act, well, uncertainly. We won’t know for sure for a few more weeks, but recent polls have increasingly indicated that the Democrats will keep the White House. Barring a WikiLeaks trove of Hillary’s lost love letters (or emails) from Vladimir Putin, maybe it’s time to look back at some of the items in President Obama’s last budget for clues to what may be coming down the pike and plan accordingly.

For some insight into elections and their impact on markets, the following Issue Brief[i] shows how making investment decisions based on the outcome of presidential elections is unlikely to result in reliable excess returns for investors. At best, any positive outcome will likely be the result of random luck. At worst, it can lead to costly mistakes.

Presidential Elections and the Stock Market

Next month, Americans will head to the polls to elect the next president of the United States. While the outcome is unknown, one thing is for certain: There will be a steady stream of opinions from pundits and prognosticators about how the election will impact the stock market. As we explain below, investors would be well‑served to avoid the temptation to make significant changes to a long‑term investment plan based upon these sorts of predictions.


Trying to outguess the market is often a losing game. Current market prices offer an up-to-the-minute snapshot of the aggregate expectations of market participants. This includes expectations about the outcome and impact of elections. While unanticipated future events—surprises relative to those expectations—may trigger price changes in the future, the nature of these surprises cannot be known by investors today. As a result, it is difficult, if not impossible, to systematically benefit from trying to identify mispriced securities. This suggests it is unlikely that investors can gain an edge by attempting to predict what will happen to the stock market after a presidential election.

Exhibit 1 (above) shows the frequency of monthly returns (expressed in 1% increments) for the S&P 500 Index from January 1926 to June 2016. Each horizontal dash represents one month, and each vertical bar shows the cumulative number of months for which returns were within a given 1% range (e.g., the tallest bar shows all months where returns were between 1% and 2%). The blue and red horizontal lines represent months during which a presidential election was held. Red corresponds with a resulting win for the Republican Party and blue with a win for the Democratic Party. This graphic illustrates that election month returns were well within the typical range of returns, regardless of which party won the election.


Predictions about presidential elections and the stock market often focus on which party or candidate will be “better for the market” over the long run. Exhibit 2 shows the growth of one dollar invested in the S&P 500 Index over nine decades and 15 presidencies (from Coolidge to Obama). This data does not suggest an obvious pattern of long-term stock market performance based upon which party holds the Oval Office. The key takeaway here is that over the long run, the market has provided substantial returns regardless of who controlled the executive branch.

Exhibit 2.

Exhibit 2.


Equity markets can help investors grow their assets, but investing is a long-term endeavor. Trying to make investment decisions based upon the outcome of presidential elections is unlikely to result in reliable excess returns for investors. At best, any positive outcome based on such a strategy will likely be the result of random luck. At worst, it can lead to costly mistakes. Accordingly, there is a strong case for investors to rely on patience and portfolio structure, rather than trying to outguess the market, in order to pursue investment returns.


[i] Source: Dimensional Fund Advisors LP.

All expressions of opinion are subject to change. This information is intended for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

Diversification does not eliminate the risk of market loss. Investment risks include loss of principal and fluctuating value. There is no guarantee an investing strategy will be successful.

Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. The S&P data is provided by Standard & Poor’s Index Services