In today’s deeply polarized environment, political opinions often run hot and it’s easy to let those emotions spill into your financial life. But when it comes to investing, history has a very clear message: don’t mix politics with your portfolio.
At Bloom Advisors, we often remind clients that the market doesn’t favor one political party over the other. It may react in the short term to elections or policy announcements, but over time, the market rewards discipline, patience, and long-term thinking, not partisanship.
Emotions vs. Economics
When your preferred candidate is in office, it’s human nature to feel more confident about the economy and markets. That confidence often translates to a more aggressive investment strategy, more stocks, more risk. But when your favored party is out of power, you may feel anxious or pessimistic, prompting a shift to more conservative holdings or even sitting on the sidelines altogether.
Unfortunately, letting political sentiment drive financial decisions often results in emotional reactions, buying high when you’re optimistic and selling low when you’re fearful. As Warren Buffett famously said, “If you mix your politics with your investment decisions, you’re making a big mistake.”
What the Numbers Say
A recent study by Vanguard confirms what decades of data already show: U.S. markets have delivered long-term growth regardless of who is in the White House. Whether the president was Democrat or Republican, a diversified portfolio of stocks and bonds has historically performed well over time.
A hypothetical $10,000 investment on January 2, 1961 in the S&P 500 would be worth more than $6.4 million on December 31, 2024. This growth was despite wars, recessions, inflation spikes, political scandals, market crashes and other events that caused the market to drop significantly.
The data underscores a crucial lesson: the stock market’s long-term growth is driven by innovation, business performance, and economic fundamentals, not political leadership.
Stay Focused on What Matters
At Bloom Advisors, we encourage investors to stay grounded in what truly matters: your personal financial goals, risk tolerance, and long-term strategy. While politics can affect the markets in the short term, reactionary investing is rarely wise.
Instead, lean into the principles that have stood the test of time:
- Diversification to help manage risk
- Discipline to avoid emotional decisions
- Patience to let your portfolio grow
No matter who holds office, these fundamentals are what drive real, lasting financial success.
