Why S&P 500 Returns Don't Actually Depend on Whether a Republican or Democrat Sits in the Oval Office

The S&P 500 has long served as the definitive measure of American market health, tracking 500 major corporations across all sectors and representing roughly 80% of domestic market value. Since January 20, 2021, when Joe Biden took office as the 46th president, the index has gained 43%, translating to roughly 11% annualized returns. Yet as election season approaches, a curious question resurfaces: does the stock market actually perform better under one political party than the other?

The Data Tells Two Different Stories

Since its launch in March 1957, the S&P 500 has delivered a staggering 12,510% total return (excluding dividends), or a compound annual growth rate of 7.4%. When examined through the lens of individual presidencies, the picture becomes politically charged—but misleading.

Looking at long-term tenure returns: Democratic administrations saw a median CAGR of 9.3%, while Republican ones achieved 10.2%. At first glance, this suggests Republicans deliver superior market outcomes. However, this measurement masks a crucial distortion: longer presidencies inflate numbers, and market cycles don’t align neatly with election calendars.

Looking at year-by-year performance: The median annual return under Democratic presidencies was 12.9%, versus 9.9% under Republican administrations. Suddenly, the advantage flips.

The contradiction isn’t a mystery—it’s statistics being weaponized by competing narratives.

Why This Data Battle Is Fundamentally Misleading

The temptation to credit (or blame) the sitting president for market moves is understandable but economically naive. Macroeconomic fundamentals, not political affiliation, determine stock valuations. Presidential policies certainly shape economic conditions, but no single leader commands complete control over markets.

Consider the evidence: the dot-com bubble collapsed, the 2008 financial crisis ravaged portfolios, and Covid-19 triggered historic volatility—none preventable by whoever occupied the White House at the time. The Democrat-led mid-1990s tech boom wasn’t a Democratic achievement, just as Republicans shouldn’t shoulder blame for inheriting the wreckage of 2008’s lending crisis.

Research from Goldman Sachs confirms this reality: “Investing in the S&P 500 exclusively during one party’s tenure would have produced significant underperformance versus simply holding the index regardless of political composition.”

The Only Data That Actually Matters

Over the past 30 years, the S&P 500 returned 2,080% including dividends—roughly 10.8% annually. This period spans Democratic and Republican control, economic booms and recessions, technological disruption and pandemic shock. The consistency across such disparate conditions suggests that patience, not political prediction, is the investor’s edge.

This doesn’t mean 10.8% materializes every year. Rather, historical precedent indicates similar long-term annualized returns will likely continue, give or take a percentage point. The partisan makeup of Washington rarely changes that equation.

The Investment Takeaway

With campaign season heating up, candidates will inevitably claim superior market credentials. Both sides can cherry-pick data to support their case—and both will be missing the point. Stock prices respond to earnings, interest rates, employment, inflation, and global trade dynamics, not ballot outcomes.

The most reliable wealth-building strategy remains unchanged: commit capital to diversified indexes like the S&P 500 and maintain holdings through political cycles. History rewards discipline far more than it rewards political timing.