Watching the U.S. election can feel stressful, and it’s easy to overestimate how much influence a president or election has on portfolios. While the current campaign stirs anxiety for investors, it’s important to remember that markets often react less dramatically than expected. With Canada facing its own political challenges, the constant headlines from the U.S. can be overwhelming, but staying calm and focused on long-term strategies helps cut through the noise.

The assassination attempt on Donald Trump, the Joe Biden debate disaster, and the dramatic impact of his replacement, Kamala Harris, have bred uncertainty. An election by its nature is unpredictable, of course, but history tells us the equity market’s behaviour during election year often follows a pattern.

Whichever party wins, the first half of the year tends to feature muted returns followed by stronger returns later in the second half, once the outcome is known. As of August 27, the S&P 500 is up more than 19% and another bull run is well under way but that more likely reflects a growing confidence that the US Federal Reserve will cut rates, rather than excitement at Harris or Trump moving into the White House.

Despite the drama and plot twists over the years, since 1928 US equities have posted positive presidential election-year returns more than 83.3% of the time, with an average return of 11.4%1. Once the victor has been established (and especially if the Fed does cut as expected), some analysts expect things to get even better. Since 1948, stocks posted higher returns in the period after election day 63% of the time2.

To counter anxiety, it’s worth noting that while you may have a political preference, markets doesn’t play favourites, and history shows it doesn’t perform better under any one party. Stocks have performed well under both blue and red regimes – the best returns, incidentally, occurred under the F. Roosevelt, Clinton, Eisenhower and Reagan administrations.

Since 1930, the average annualized price return (excluding dividends) of the S&P 500 was 9.6% when a Democrat won and 5.7% when a Republican won. But over a longer period, results for both parties are similar, with the S&P 500 returning around 7%.3 Under Trump and Biden, despite appearing worlds apart on policy, the S&P 500 returned 14% per year under each president.

Despite these facts, it’s understandable that the turmoil of election years increases the risk of unnerved investors changing their portfolio based on perceived strengths of the