Here we are, in January 2025, with a new administration in the White House. President Trump has taken office again, ending four years of the Biden administration. If history has taught us anything, it’s that the stock market doesn’t seem to care who’s in charge. Despite dire predictions every election cycle, the market keeps doing what it does best - moving forward.
Think back to 2020. Less than 50 days into the Biden administration, the stock market had already risen more than 20% since Election Day. Many feared his policies - raising taxes, increasing regulations, and expanding government spending - would hurt the economy. But the market kept climbing. Investors had already factored in what a Biden presidency would look like, just as they had under Trump before him. The lesson? Elections grab headlines, but they don’t drive the stock market.
In fact, back in November 2020, I wrote: “We look at the presidential election as we do any other event - we mostly ignore it.” That philosophy remains true today.
What Does the Stock Market Actually Care About?
While elections dominate the news, the stock market plays a different game. It’s always looking ahead - six to twelve months into the future - trying to anticipate where the economy is heading. It doesn’t react emotionally to political shifts; it reacts to the fundamentals of growth, inflation, interest rates, and corporate profits.
Right now, just as it did in early 2021, the market is watching the economy, not the presidency. Back then, it was focused on recovering from one of the sharpest bear markets in history, brought on by the COVID-19 pandemic. Today, it’s looking at new opportunities and risks. Some investors are optimistic about Trump’s promises of tax cuts and deregulation. Others worry about potential trade conflicts or inflation. But the market doesn’t take sides - it simply adapts.
Yes, short-term events -0 policy changes, economic shocks, or global conflicts - can cause market swings. But over the long run, the market has a way of absorbing these changes and marching forward. Even if the market dips in response to new policies, it’s usually a temporary reaction rather than a long-term shift.
History Repeats Itself - And the Market Knows It
For more than a hundred years, the stock market has navigated wars, depressions, recessions, inflation, political turmoil, and everything in between. It has weathered Republican and Democratic administrations alike. And despite all of that, it has continued its long-term upward trend.
Think about it: every bear market - no matter how severe - has been followed by a stronger and more extended bull market. Why? Because innovation, corporate growth, and investor confidence drive the market more than any single president ever could.
So, what’s the takeaway? Don’t get caught up in political drama when making investment decisions. The stock market isn’t blue or red - it’s green. If you focus on quality investments, strong companies, and long-term growth, short-term political changes will be nothing more than noise.
The perfect antidote to election-year anxiety? Ignore the headlines, stay focused on the fundamentals, and invest with a long-term mindset. History has shown that’s the best strategy, no matter who’s in the White House.
