Does your 401(k) miss President Trump?

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U.S. Rep. Jim Jordan, Republican of Ohio, tweeted this analysis of the stock market earlier this month.

Jordan is implying that your 401(k) is not doing as well under President Biden as it did under President Trump. Under President Biden, the Dow Jones Industrial Average, an index of 30 prominent stocks, is up just under 10% through about 16 months, while under President Trump, the Dow increased more than 50% in four years. [1]

If the Dow continues performing this way for the rest of Biden’s term, your 401(k) account may not perform as well as it did under Trump, especially if it contains mostly stocks.

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But this thinking ignores how investing actually works.

Comparing the stock market’s performance based on who is president makes for good Twitter fodder, but it’s not very useful information in real life. Your portfolio doesn’t reset when a new president takes office. The 10% gains under Biden may not compare well to the 50% increase under Trump, but the increases under Biden are *on top of* the performance under Trump. Your portfolio is still better off today than it was at any time under Trump.

2. Your 401(k) is a long-term investment

Your retirement funds don’t need to deliver over four-year horizons, as presidents do. Their performance matters on a much longer time scale. When you invest over the long-term, it helps to ignore the short- or even medium-term fluctuations of the markets and trust that over the decades before your retirement, the economy will grow steadily enough to fund your post-work years.

3. It’s not clear whether presidents influence the stock market

People invest retirement funds in the stock market because it generally goes up over the long-term. The only presidential administrations in the past century that saw negative stock market returns were George W. Bush, Jimmy Carter, Richard Nixon, and Herbert Hoover. Under 14 out of 18 presidents, your 401(k) would have done just fine.

There’s no rhyme or reason explaining why the stock market happened to do badly while those four men were presidents. Research shows stock market returns tend to improve under Democratic administrations, but with a sample of only 18 presidents over 100 years, it’s hard to draw the conclusion that Democrats have special stock-market-boosting powers. [2] If they did, they’d probably win more elections.

It’s doubtful Jordan, who has a history of missing important details, considered any of this when he tweeted. He probably just wanted to score some quick political points. (Jordan did not immediately respond to a request for comment.) And short-term sentiments like this can have an impact on investments, as researchers have shown based on the correlation between popular music and the stock market. But when you’re investing over the decades for your retirement, your portfolio is going to outlast any single president: you’re betting that the economy will grow bigger and stronger over the next two-to-four decades, not over the next four years.

“Instead of focusing on cheap shots politicians fire across the aisle,” says Ian Bloom, a certified financial planner and owner of Open World Financial Life Planning, “I would always have my clients look for the things they can control: ‘Am I allocated properly? Given how great the labor market is, am I getting the most for my skills? Am I saving what I should be toward retirement and other future goals?’ If those things are in alignment, we’ve done what we can for now.”

References:

  1. Macrotrends

    Stock Market Performance by President” Accessed May 10, 2022.

  2. The Journal of The American Finance Association

    The Presidential Puzzle: Political Cycles and the Stock Market” Accessed May 10, 2022.

This article originally appeared on Policygenius and was syndicated by MediaFeed.org.

 

This generation approves of Biden the least

 

President Biden’s approval rating has been taking a bit of a battering of late, and as new analysis of survey data by Gallup reveals, it’s among the younger voters where the biggest falls are being recorded.

 

Here are the percentage point changes in Biden’s approval rating (from January-June 2022 to September 2021-March 2022) by generation.

 

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Percentage point change in Biden’s approval rating: -21

 

Gage Skidmore

 

Percentage point change in Biden’s approval rating: -19

 

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Percentage point change in Biden’s approval rating: -15

 

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Percentage point change in Biden’s approval rating: -7

 

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Percentage point change in Biden’s approval rating: 0

 

(Defined as those born between 1927 and 1946)

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There has been a 21 point drop in approval with members of Generation Z (born 1997 to 2004) since the first half of 2021, bringing the rate down to just 39 percent, the lowest of all the generation groups having been joint highest with Millennials. Speaking of which, those born between 1981 and 1996 registered a 19-point decrease in approval of the president, falling to 41 percent, and one percent below the national average of 42 percent.

 

Gallup provides some context for the changes: “By the summer (of 2021), as coronavirus cases unexpectedly rose, Biden had lost significant support among Generation Z, millennials and Generation X, ranging from seven- to ten-percentage-point drops. But his approval rating held steady among baby boomers and traditionalists. All generational groups have become less approving of Biden since the summer, after the troubled U.S. withdrawal from Afghanistan in late August 2021, with the exception of traditionalists, whose approval has not changed.”

 

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Survey results are based on combined samples of 14,229 Americans ,18 years of age or older. The survey was conducted by Gallop. More methodology and source information can be found on Statista.

 

This article originally appeared on Statista.com and was syndicated by MediaFeed.org.

 

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Featured Image Credit: Michael Vadon.

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Myles Ma

Myles Ma is an editor at PolicyGenius.com.