There’s a common misperception that Democratic administrations are bad for investors. However, over the past 45 years, US stocks had an average annual gain of about 13% regardless of which political party was in control. 

US Stocks Have Generated Strong Returns Regardless of Government Makeup

S&P 500 Index average annual return (1975–2020)

Sources: Morningstar, Senate.gov, and House.gov as of 12/20. Indices are unmanaged and not available for direct investment. Past performance does not guarantee future results. 

Market Returns Under Democratic and Republican Presidential Terms

What if you just consider the president without Congress? Democratic presidents actually have a slight performance advantage. However, the difference in returns vanishes when you remove the outlier boom years under Bill Clinton and the Global Financial Crisis under George W. Bush. In other words, the markets really don’t have a party preference after all.

S&P 500 Index average real annual returns (adjusted for inflation) 1933–2020

Data source: Datastream Refinitiv, Robert Shiller dataset, and Schroders, 7/31/33-12/31/20. Real (adjusted for inflation) total return from first year in office to 7/31 of final year in office to exclude the election effect (President Trump’s term is shown through 7/31/20).