Do not let politics influence your investment decisions

I recently stumbled upon an interesting statistic, which showed the performance of US Equities by president since president Kennedy.

This chart basically shows that on average, US Equities do not really care much who is in charge at the White House. While policy could affect some companies and some industries, it doesn't really seem to matter for markets who's at the White House. Even if those do occur, their impact and magnitude of the change are hard to ascertain at the moment. Hence, that change is as good as any guess.

If you had only invested if just the Republicans are in power or if just the Democrats are in power, you would have missed out on a large chunk of total returns over the past 63 years.

I am mostly posting this, as I have often heard folks make drastic portfolio changes based on political affiliations. In general, that is most likely a mistake. And possibly a very expensive one, given the opportunity cost of missed power of compounding. 

I would advise against letting political events influence investment decisions, as that is mostly a knee-jerk short-term timing. I emphasize long-term investment principles over political noise. This aligns with broader investment advice to focus on fundamentals rather than short-term political changes.

The chart in the post references historical data from January 1961 to December 2024, showing that the market generally grows under both Democratic and Republican presidencies, except for a notable decline during George W. Bush's term, which was impacted by significant economic events like the dot-com bubble burst and the Great Financial Crisis. That being said, no indicator is 100% right. But trying to time the market based on a single data point is probably not going to work out over time. The best investment strategy is to ignore that noise, try to avoid your costly biases, and stay invested.

As Dividend Growth Investors, we focus on individual companies and businesses. We care about whether those businesses can continue growing earnings and dividends over time, how safe those dividends are and whether we can buy those shares at a good entry point. It doesn't really matter as much who is in the White House. 

Even the Oracle of Omaha shares this view too. He has stated on numerous occasions that you do not want to have a political view when investing. That's because this view could bias you, and essentially you may end up shooting yourself in the foot. He has mentioned that he has been able to invest under every presidency he has lived through, without worrying who's in the White House.  Warren Buffett says it doesn't matter who's in the white house

Stay true to your long-term strategy, do not let yourself be driven by narratives and do not interrupt the compound interest effect without thinking.