You’ve probably heard it a thousand times at a Thanksgiving dinner or on a frantic cable news segment. Someone claims the economy always tanks when a certain party takes the White House, or that the "other guy" is the only one who knows how to make the Dow Jones sing. Honestly? Most of that is just noise. If you look at the stock market under each president over the last century, the reality is a lot messier, more surprising, and frankly, less about the person in the Oval Office than you’d think.
Basically, the market doesn't care about your political feelings. It cares about earnings, interest rates, and whether a global pandemic or a housing bubble is about to explode.
The Legends and the Laggards
Let's talk about the heavy hitters first. If you want to talk about absolute dominance, you have to mention Calvin Coolidge. "Silent Cal" oversaw a market that returned about 26.1% per year. He walked so the Roaring Twenties could run, right up until the cliff. Then there’s Bill Clinton. People forget how much the tech boom of the 90s fueled those years—he saw annualized returns of around 15%.
On the flip side, you have the guys who just had terrible timing. Herbert Hoover is the poster child for this. He took office in 1929, and we all know how that ended. The market dropped over 30% annually during his term. Was it all his fault? Probably not, but he’s the one holding the bag in the history books.
More recently, George W. Bush had a rough go. He’s the only president in modern history to oversee two separate bear markets—the dot-com bust right as he walked in and the 2008 financial crisis as he was walking out. His annualized return was a painful -5.6%.
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Does Party Actually Matter?
This is where it gets kinda weird. If you look at the raw data from 1926 through today, the S&P 500 has actually performed better under Democratic presidents than Republicans. We’re talking roughly 14% for Democrats versus about 7% for Republicans.
Wait. Don’t run off to change your voter registration just yet.
Wharton Professor Jeremy Siegel and many other market historians point out that this is a "well-known fact" that doesn't necessarily imply cause and effect. It’s often a matter of where the business cycle sits when the moving vans arrive at 1600 Pennsylvania Avenue. For instance, Barack Obama took over in 2009 when the market was basically at rock bottom. There was nowhere to go but up. He ended his two terms with a solid 12.8% annualized return.
Similarly, Donald Trump’s first term saw a 13.6% annualized return, bolstered by the 2017 tax cuts and a massive pre-COVID rally. By the time Joe Biden stepped in, he inherited a recovering post-pandemic economy but had to wrestle with the highest inflation in forty years. Even so, the market under Biden (2021-2025) managed an 11.9% annualized return.
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The Weird Logic of Divided Government
Most investors hate uncertainty, but they seem to love a stalemate. History shows that the stock market under each president often does best when the White House and Congress are split.
Why? Because it’s hard to pass big, disruptive laws when no one agrees. Markets love stability. When a Democratic president deals with a divided or Republican Congress, the S&P 500 has historically averaged returns north of 17%. It's like the market thrives on the fact that nothing "too crazy" can get through the legislative gauntlet.
Returns by the Numbers (Annualized)
- Calvin Coolidge (R): 26.1%
- Bill Clinton (D): 15.0%
- Donald Trump (R - 1st Term): 13.6%
- Barack Obama (D): 12.8%
- Joe Biden (D): 11.9%
- Ronald Reagan (R): 10.2%
- George W. Bush (R): -5.6%
- Herbert Hoover (R): -30.8%
The First 100 Days Myth
We put a lot of weight on the "First 100 Days." In reality, it’s a tiny sample size. Take Donald Trump’s second term starting in 2025. The market actually had a rough start—dropping nearly 17% by April 2025 due to fears over aggressive tariff policies and inflation. It was the worst start since Nixon’s second term in 1972.
But then? It roared back. By July 2025, the S&P 500 was hitting new all-time highs again. This just proves that the initial "honeymoon" or "panic" phase of a presidency is rarely a good indicator of the full four years.
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External Shocks vs. Policy
Presidents get too much credit when things go well and too much blame when they don't. Richard Nixon didn't "cause" the oil embargo of 1973, but his market numbers (down 3.9% annually) reflect the pain of that era.
Modern presidents are also at the mercy of the Federal Reserve. When the Fed was slashing rates to zero during the Obama and Trump years, the market had a massive tailwind. When the Fed started hiking rates aggressively under Biden to fight inflation, the market felt like it was running through mud for a while.
Actionable Insights for Your Portfolio
If you’re trying to time your investments based on who is winning the next election, you’re probably going to lose money. Here is the real-world takeaway from a century of data:
- Stay Invested: The S&P 500 has trended upward over the long term regardless of who is in charge. Missing just the 10 best days in the market over a 20-year period can cut your total returns in half.
- Watch the Fed, Not the President: Interest rates and inflation have a much more direct impact on your 401(k) than a White House press release.
- Sector Bets: While the broad market might rise, specific policies do help certain sectors. For example, defense and industrials surged after the 2016 election, while green energy saw a boost early in the Biden administration.
- Ignore the Noise: Volatility always spikes in election years. It’s a feature, not a bug. Since 1926, the market has finished an election year in the green 83% of the time.
The most important thing to remember is that the American economy is a massive, complex machine. A president is like a driver who can nudge the steering wheel a few degrees, but they aren't the engine. The engine is corporate earnings and innovation. As long as those stay intact, the market usually finds a way to climb, no matter who's living at 1600 Pennsylvania Avenue.
Next Steps for You:
Check your portfolio's sector allocation. If you’re heavily weighted in one area, look at how sensitive those companies are to current trade or tax policies. Most importantly, avoid making "emotional" trades based on the news cycle; the historical data proves that time in the market beats timing the political cycle every single time.