What decades of Canadian and U.S. election cycles actually tell us about market returns and your portfolio performance. by Tradex Management Inc. | September 16, 2026
Every election season produces the same reflex from investors, check the polls, check the portfolio, wonder if it's time to move to cash until the picture clears up. It's an understandable instinct. It's also, historically, one of the more expensive habits an investor can pick up. The data tells a more specific story than “politics doesn't matter” and that the wrong kind of political worry, timed the wrong way, tends to do more damage than the politics itself.
The real risk isn't who gets elected but rather investor behaviour.
Stepping to the sidelines into a high interest savings account or money market fund feels safe. But getting defensive ahead of an uncertain event requires getting two decisions right, when to get out, and when to get back in. Investors are far better at the first than the second, and the cost of that asymmetry shows up in the data.
During 2023, a record wave of money moved out of stocks and bonds and into cash-like instruments, with money-market assets climbing past $5 trillion ($8 trillion in 2026). While this instinct is natural during uncertainty, it's also usually mistimed, because the market's best days and worst days tend to sit right next to each other as illustrated below.
Source: RBC Global Asset Management
Miss those handful of days (which cluster around the very volatility that scares people out in the first place) and you give up roughly half of the multi-decade return of staying invested. This is the core case for staying put through a noisy news cycle rather than reacting to it.
This is a fitting line for election season. Every headline, whether it’s a debate, a poll shift, a surprise upset, looks like a reason to pull over. However, almost none of them turn out to matter to a portfolio built for the long run.
The behaviour gap: what the average investor actually earns
It is not just theoretical. Real-world data tracking what investors actually earned, as opposed to what the markets they invested in returned, makes the same point with a harder number. Over the twenty years through from 2006 to 2025, U.S. stocks compounded at 11% annually and even a standard 60% equity and 40% fixed income diversified portfolio returned 7.2%. The average investor, blending across all the money they put to work, captured just 4.5% a year, only slightly ahead of inflation and behind nearly every asset class shown below.
Source: RBC Global Asset Management
That gap is not a stock-picking problem but rather a behaviour problem. Chasing headlines in and out of the market, including election headlines, is exactly the kind of decision that turns an 11% return into a 4.5% one. The market did its job over those two decades. The shortfall was almost entirely self-inflicted.
Do elections actually move markets? If we look back far enough, a pattern emerges. Markets react to the resolution of political uncertainty, not to who wins. A study covering all nine Canadian federal elections between 1960 and 1992 found that markets tended to rise during election month regardless of which party took power, and that there was little difference in performance or volatility between minority and majority outcomes. The market, in other words, mostly just wanted the vote to be over.
Now, what about the U.S. elections? Well, if you zoom out far enough, the noise cancels itself out. The S&P 500 since 1933 shows the same climbing line running through Democratic and Republican administrations alike. Recessions, wars, oil shocks, impeachments, and landslide elections all show up as dips and pauses, not as a pattern tied to which party held the White House. Ninety years of data, more than a dozen changes of power, and the index has kept compounding through nearly all of it.
Source: RBC Wealth Management, Bloomberg; monthly data through 2/20/24 shown on a logarithmic scale. Categories separated by inauguration dates when a party change occurred
The market has never needed a particular party to win in order to keep working. It needs other factors such as earnings, innovation, and time. Whatever happens in November, the more useful question isn't who wins, but whether you're still invested afterward. Brought to you by Tradex Management Inc.If the last few sections left you wondering whether your own portfolio is built to ride out this kind of noise, that's exactly the conversation we like to have. Reach out to a Tradex Advisor and we'll take a look together at no cost.
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