The elections are almost over. We have a Democratic President-Elect and a Democratic House of Representatives. Control of the Senate will be decided on January 5th. What does that mean for the stock market? You might be surprised.

Looking at the long-term data from 1948 to today:

• If you invested $10,000 only when a Republican was President, it would have grown to $76,000.
• If you invested the same amount only during Democratic presidencies, the value would be $296,000.
• But if you stayed invested the whole time — regardless of which party was in power — that same $10,000 would have grown to $2,200,000.

A clear political winner? Not really. The biggest gains have always come from staying invested.

Now let’s look at Congress. Historically, the strongest market performance has occurred with a Democratic President and a split Congress. Interestingly, the lowest returns don’t come when the President faces opposition in both houses—but when one party controls everything.

Beyond the election, we also faced a bear market, a recession, and a global pandemic — all in the same year. During bear markets and recessions, companies tend to focus on becoming as efficient as possible. Permanent cost reductions and accelerated technology adoption are common outcomes.

The phrase “this time is different” is often called the most dangerous in investing. Yet, in many ways, this time *is* different. We’ve never before experienced a bear market, a recession, a pandemic, and a contentious election all in the same year. The sheer number of innovations introduced by corporations — combined with widespread operational efficiencies — has led to a sharp and unusual V-shaped recovery, rather than the more typical W pattern.

To clarify:

• A V-shaped recovery has one sharp downturn followed by one sharp recovery.
• A W-shaped recovery has a first decline, a brief rally, then a second drop before the true bull market begins.

But the best may be yet to come.

Bull markets are often born from the ashes of recessions. As companies emerge leaner, more innovative, and more focused, the seeds of the next expansion take root. This past year saw an extraordinary wave of innovation. Economists and traditional data sets often miss these shifts, but company-level research is uncovering real opportunity. This focus on individual companies, rather than broad market movements, may be the key driver of future gains.

History isn’t a prediction. But it also shouldn’t be ignored.

Katz Family Financial