US Elections and Markets: A Look at History

Well, welcome everybody and thank you for joining us for a conversation on markets and elections. I'm Mark Gochnour, head of Global Client Services, joined today by Jake DeKinder, head of Client Communications. It's gonna be a fun session, we think it'll go a little over 30 minutes, perhaps. We will have some slides that you have access to. So if you screen down a little bit, you'll see a little carrot there for an advanced resources tab. You click on that, you can get the slides. Then of course, any questions you have on your mind, feel free to submit those. We've gotten some in advance already, so thank you for those, who sent those on. Jake, let's get rolling here. Now, I'm gonna go back to eighth grade, and in my presentation skills class in eighth grade, the teacher said, "you never talk about politics and you never talk about religion." And here we are talking politics. We are, we're gonna break one of those rules today. We're not gonna break the second rule. That might be an interesting Friday broadcast here, but it's obviously a relevant topic. We know that financial professionals are getting questions about this, we know it's on the minds of a lot of people here in the US, a lot of investors, so we're gonna dive into it. Yep. Let's do it. A couple things we're gonna focus on here today: We are going to talk about two major things. The first one is going to be a theoretical framework for thinking about elections and how might they impact or maybe not impact markets. And then we're gonna do a dive into the data and see if there's any lessons there we can pull out of history and see how it might impact our portfolio and any decisions we need to make going forward. So Jake, I wanna start out with a question that was submitted in advance. And we'll start this one, it was from Roman, which is a great name by the way, and here's what Roman asked: He said, "are there observable market patterns based upon election time and controlling party in the White House, Senate, and the House?" So just a perfect question to open up, cause that's what we're gonna dive into here, in this whole thing. So to do that, let's go ahead and take a look at some recent market returns. Now I wanna go back to the S&P 500, and we're gonna look at 35 years of data for that. So you can see there, and there's nothing magic about this time period we're looking at. It fits nicely on one page. I think for many of the listeners out there, 35 years, it's probably been a pretty big part of their investment experience... Seems reasonable. Yeah. Over time here, and as an investor, we always want to avoid the bad stuff, the bottom part of that, you know, below the line. And we wanna make sure we capture just the good stuff. I mean, that's just how we're wired, that's what we want to do. So let's connect that to the title which it may look like that was an error in typos, it's not. It was intended to be typed that way. When you look at that will XYZ party control or have an impact on markets? So whether it's Republican controlled Congress, Democrat controlled Congress, or maybe a mix, how does that impact market returns? So let's take a look at this chart in three sections, and let's just start with the first 12, 13 years here and take a look at that. And what we're gonna do is we're gonna color code this. So the years where Congress was controlled by Democrats, that'll be the blue. Where it was controlled by Republicans, that will be red. And then if there are years where it was mixed, we'll see some white bars coming into play here. So you look at that first part of our 35 years here, Jake, and really good returns across the board, really good returns when Democrats or Republicans were in control of Congress. Now, if you're running through the middle section there, we see the opposite in the sense of some pretty tough years. And again, you see those tough years happen during oversight by Democrats and Republicans. And then we run out the next third and we see there about how you see a mix now coming into play. Again, several years of really good returns. Some of it was by Republicans, some Democrats, and some during mixed. So I'm just gonna ask you Jake, as we kind of ran through those various time periods, did any pattern jump out to you looking at those colors? No, there's really not a pattern, right? And I think our viewers probably understand that we were gonna reach that conclusion. Actually, I'll give you one thing that jumps out to me. There is, I see a whole lot of positive returns regardless of who's in control of Congress, is what I see. Yeah, thankfully. And the idea of why wouldn't there be patterns? Now, is it natural to think, "Well, maybe some of the election stuff does impact market returns," but a couple reasons why maybe you don't see something so clear in terms of a signal perhaps, or a pattern that investors often look for is one, and this is something that's just foundational to what we believe in here at Dimensional, from our investment philosophy, is information is in price and it's built into prices very, very quickly. So markets don't just say, "Hey, we're gonna wait until this election and see what happens, and then we'll react and think about what that might mean going forward." Nope, markets are on it right now. Everything that's known to all investors, really around the world as it applies to anything political, it's already gonna be in prices, and you know, they're trying to anticipate any implications of that going forward. So that's number one. Number two is the question, "is politics the only thing impacting market prices?" In the answer is no way, right? There's tons of hundreds of things impacting prices day-to-day. Well, you think about standing here today, I mean we're at the end of Q3, we're about to hit October here, start of Q4, and you're right in terms of we know that there's a midterm election coming up and guess what? The market's already pricing potential outcomes of the midterm election. Do do any of us know exactly the way that's gonna shake out? No, but those expectations are constantly being sort of baked into market prices. And to your second point there, "is it the only thing that's impacting it?" It's not, you know, think about what's happening today. Yes, we have a midterm election coming up in the US. What we also have is we have inflation that we're dealing with. We have questions about are we in a recession right now? We have a war going on in Ukraine. We have energy prices, we have decisions by US government, by other governments around the world, by central banks all around the world. All of that stuff is gonna be incorporated into market prices, so again, it's so convenient in our minds, of this party's in control, that here is X and therefore the stock market is gonna do Y. And as we've said repeatedly, it's just, you're just looking for a signal because it gives you comfort, but that's not the way that investing works. Well you mentioned several things on our mind right now as investors. Let me read a question here or ask you a question from Rick. "Does the Fed matter more than the president on market impact?" There's a lot to unpack in that question. I mean, first off you think about, okay the Fed, does the Fed have an impact on the stock market? Does it have an impact on interest rates? And and by the way, on the interest rate one, I wanna be careful, 'cause it's the Fed fund's rate not rates, right? What, one rate. It's one rate and there are hundreds of rates around the world. So does the Fed have an impact? Sure. Does who's in control of the US Congress have an impact? Sure. Does who's in control of other governments around the world? Sure. And so do all of those other factors that we cite. So again, you know, does the Fed have more of an impact or does the control of Congress have, or who's in power? That's almost impossible to tease out because there's so many factors that are gonna play into that. As investors, we're wired to think, "okay, I want to narrow it down to this causes that." And again, the idea of avoiding the bad, getting the good as you described there, but we have a tendency to try to single it out is one thing. But it's hundreds of things and it's just really hard to know which one's impacting it day-to-day. But let's go back and take a view here on the full chart here of these times and go back to some key moments that we've lived through as investors that perhaps had, I'll say maybe very little or nothing, to do with politics at the time. So let's pull the chart up here and let's start at the very beginning in 1987, that first column there. Now, we always like to bring up and remind people about Black Monday. Right, in I think it was October 1987. 1987. 23% down in one day. Yep. So the S&P was down 23% in one day. Now, was that controlled or impacted by the Democrats overseeing Congress at that time? I mean, again, was there some potential that there was? Sure. And so was many other things. I think that's, by the way, why you wanted to start the chart in '87. You love citing that Black Monday. I do. But it's a great point, right? It's a major event. Was the control of Congress impacting it? Maybe, maybe not. How about you go to '90, '91, right? I mean, sure decisions were made by the US government in terms of what we're gonna do, in terms of the invasion over in, or going over and fighting the war in, the Gulf. But there was a lot of other factors that play into that. You know, you go through this kind of tech boom period here in the '90s and certainly the tech bust, you know, you have to ask yourself, "was the Republican control of Congress completely responsible for that?" No, there was so many other technological advancements, probably excitement by investors, many other things that were flowing into that. And you continue to fast forward, you know, through the chart and there's other years as well where it jumps out. Yeah, you got 2008, the global financial crisis, which we say "global" because markets all around the world were down about 50% during that kind of peak to trough. And then, you mentioned my favorite is Black Monday, your favorite's always the downgrade of US debt in 2011. And it's interesting there that that one happens to be a mixed Congress during that time period. And then you just kind of run it out through things going around globally over the next several years. And you highlight a lot of things top of mind for us the last couple years, whether it's Covid, whether it's all the things going on with inflation, interest rates, and everything else. So how much of that's due to politics, how much is just due to, I'll call it "life"? Hard to disentangle those. Well and the '08 one is an interesting one to me because you know, you look at this chart and you say, "okay, so I get a big down year in '08 when the Democrats are in control of Congress." Alright well, were the decisions leading up to '08, when it was fully controlled by Republicans, did they contribute to '08? Maybe. I mean, probably in some way, maybe they did, maybe they didn't. Were the Democrats completely responsible for a huge negative return in 2008? Probably not. That's a tough argument to make. I mean, many factors. The the point there is that, let's remember too, that different policies that are put in place, different regulations that come about, different bills that are passed, decisions that are made by governments, they take a little bit of time to play out. Certainly, when the information comes out, it's new information and markets are going to react to that. But then as that sort of rolls through Congress, as spending goes out, as other information comes out, markets are gonna react to that as well. And you know, look, you go back to really an incredible labor economist that we worked with, Ed Lazear, and I remember a conversation that you had with him asking him questions about, "hey, when some of this spending gets approved, kind of how does it shake out?" Well, and he was talking about even well before anything related to Covid, it's just that he said it takes years and years. So let's just say you have a hundred bucks approved, by the time that trickles down to actually being spent in the various things, it takes several years and you're not even sure how much of it is actually spent on the initial thing, so it's just hard to know exactly. But one thing I do wanna make very clear here is we're not trying to discount people's passion and views when it comes to politics and how they think about what's important to them. Absolutely, people are gonna be energized by that, go vote. That's how you express your personal views. We encourage people that, right? That's the beauty of, I think, America and our democracy. But just be careful, sort of keep that to the side. Don't try to connect that, then, to your investment plan and your investment returns. We've been having a lot of conversations recently about inflation. We're hearing that in the news. Everybody's reading articles about it, everybody's feeling it, as consumers. And one of the points I try to make is is that what you're experiencing as a consumer is maybe, it's not the same as the questions that you should ask as an investor. And I think a little bit around politics is the same. To your point, I believe we live in a great country. I think it's awesome that we can vote for people that support our values and all of that. And like you said, if it's important to you we encourage it. Be careful, don't let that carry over then into your investment decisions. Be careful doing that, because sometimes it can potentially be harmful to your financial outcome. Yep. And you, you mentioned inflation and that's one thing I just wanna highlight here. We did hit some questions in advance around inflation. I'll just just remind the viewers out there: We did a webcast in July, Jake and I did, it was called "Weathering the Storm" where we tackled the concept of inflation. There were several questions here about "Does gold fit into that?" "How do I think about inflation and my returns?" So I'll just encourage you if you have some time, go to dimensional.com and you can click on the insights tab and you can just scroll down to July 13th, I think it was, and you can see the webcast we did on inflation and that'll address some of the questions that came in about that. So thanks for sending those in advance there. So quick plug on that. Let's bring it back to our conversation, though, around elections and, Jake, we're kind of talking a little bit about, again theoretically, there's so many things impacting prices, it's in the price, hundreds of factors. But now let's go into the data and dive right into what can we look at, specific years where there are midterm elections, like we're in now, is there anything we can learn in the past on markets, did they go up, did they go down during midterm elections? Yeah, so let's do. Let's take a look at some of that data there. Hang on one sec here, it looks like my... Sorry, you did the hand. Did you see the hand? Oh, I did. It advanced all the way. I'm gonna get back into my slides here cause I wanna show people this, but if we take a look at, oh hang on one sec. Promise, can you go ahead and shift over to the slides in the booth there and we'll, but one of the things we wanna look at Mark, is is that you wanna look at historical data, right? You want to be able to look back and say, "Hey listen, I know I'm in a midterm election year, so if I go back and I look at midterm election years, what have I kind of seen there?" Because that's really the question that people are asking is to say, you know, I want to know what am I supposed to do, as an investor, as I lead up to this election here? And we've had that question many times before. And as you've hit on, a lot of these are just sort of market timing questions in disguise, right? There's some signal that we are looking for. There's something that we want to understand better about if this is going to happen, here's what's going to happen in the stock market. And as we've talked about many times, that's a challenging thing to do even in midterm election years. Yeah. So let's take a look at what we've seen there historically, when we have a year, and what the calendar year return was for the year that we had midterm elections. That's right. And so what we're looking at right here, and many of you know, Mark and I are gonna use S&P data, 'cause we can go back really far and you can go back to 1926 on it. And what you're looking at here is this is looking at all the years where we had midterm elections and interestingly enough, if you take this and say "when did we have positive years and when did we have negative years?" We'll take a look at that data. And you have nine years where you had negative returns and you have about 15 years where you had positive returns. So a little bit different percentage than what we had seen in the over overall market. In fact, if you go in and take a look, your average return in that midterm election years was right around 8.6%. You do get some positive years in there as you can see, right here. But you're also gonna get some negative years. And that point's incredibly important because look, whether I'm looking in election years, or I'm looking in any calendar year, you know in the short term you can have some pretty extreme results. And that's whether you're looking at stocks in a given year, it's whether you're looking at country returns, it's whether you're looking at the premium small versus large. This shouldn't be a surprise that in any given year, election or not, you can kind of get a big spread. But I want to take it back to the questions that we should ask, as investors, and as an investor, you always want to be forward looking. So I mentioned earlier, it's September 30th, we're standing here, we're about to hit Q4. I was kind of curious to say, "hey, if you look at Q4 of midterm election years, what do you see there?" And interestingly enough, you actually see really strong returns in Q4 of midterm election years, about six and a half percent in that three month period. You know, you multiply that by four, you come out to about 26%. Again, we're not making a prediction that you're, you know, you can do that, but I do think it's important to give some perspective there. And in fact if you sort of carry through that idea of forward looking, what if we went and we looked at the year following midterm elections. So we're looking at that same view, that same chart. But if you notice, each year is shifted forward. So this is the year after midterm elections. What do you see here? You actually only see two negative years. Interestingly enough, you can see here there was in the thirties we got a pretty big negative year. Here's your other negative year. Now just a side note, in one you had Republican control of Congress and another one you had Democratic control of Congress. Really, I wouldn't read too much into that, but the average return was incredibly good in that year. So again, we are not making a prediction of it's September 30th, it is time to pile into stocks and the next 15 months are gonna be the most incredible run ever. At the same time, Mark, if you ask me, "Hey what do you think's gonna happen in Q4?" My response is gonna be, on expectation, I think stocks are gonna be positive. If you ask me what do I think is gonna happen in 2023, I think stocks are gonna be positive. And if you ask me that any day, of the week, of the year, election year or not, that's gonna be my answer, 'cause in expectation, we would always expect stocks to go up. Yeah, that's how market pricing works, the mechanism of "would anybody buy security if they thought it was gonna lose money?" No, right? Because that's how markets priced it. There's always gotta be a positive expect of return, every single day, as you alluded to. Now let's connect that idea. There's a couple questions came in here around that, Jake. It's, "yeah, okay, but you know, going forward then, how do we think about returns?" And that it connected the question here, too, about the idea that, "okay, markets reflecting information very quickly," so let's say a policy change is announced, markets will react to that, and the question was, "well if it takes a while to trickle down, then, how would that be reflected in prices?" And I would, I'll give it a shot here and then you can give your thoughts on it, is that when something like that is announced, the markets will reflect what they anticipate the impact to be, but over time, it's gonna adjust. So let's just say that a hundred dollars example I made, let's just say, "you know what, that money got out there right away and it had this impact on the economy." If it was better than expected, probably see prices go up, if corporate profits went up. If it was perhaps a worse experience than expected, as price did, maybe it impacted corporate profits in the economy worse, you'd probably have prices go down. So it's always adjusting, depending on what we find out in the future. Let's relate it back to 2020 and, not always pleasant to go back to 2020, but let's relate it back. We're going through a global pandemic, everybody's, there's a lot of chatter of "hey are we gonna get vaccines? Are we not gonna get vaccines?" We get an announcement that we're gonna get a roll out of vaccines. Okay, new information, market may react positively to that. Now you go forward and maybe information comes out of, "yeah, we've got it, but the supply chains are gonna get you know, a little bit, take a little longer to get the vaccines out or you know, it's not quite working as effective in some people as we thought maybe it could have, it's new information. And I guess I think about it the same way with that question of I get an announcement on something that Congress is gonna do, something that the government comes out with, on the news when it comes out, markets will react and then as that plays out, markets will react, as well, as more information comes out. When it ties into a question that came in advance as well, I wanted to read here, and this one from Luke, around tax policy, so he says, "I'm just curious about all the possibilities, specifically if you think any big tax changes are in the works." Okay, so that idea then of going back to does, I'll say tax policy, do changes by whoever's in control of Congress or the president, does it impact markets? Yeah, absolutely. But again, it's hard to know exactly how much. Well that's just it. I mean, it goes back to all the points that we made. So does it have an impact? Sure. But you know, let's also think about this, Mark: So when we have changes in tax policy, when we have control of congress ship from mixed to Republican, or Republican to Democrat, do you think that companies just decide to stop making products, to stop providing services, right? You're gonna shift from democratic control to Republican control and General Motors is gonna say, "Nope, I'm gonna stop making automobiles." That is not the way that companies think. Companies are for-profit-seeking entities and regardless of tax policy and what that is and tax rates, regardless of who's controlling Congress, regardless of regulations that are coming out, companies, for the most part, are gonna find ways to work around that. Take it down to the individual consumer. Right? Let's think about this. So you know, Mark, we got this election that's coming up and if the Democrats are fully in control of Congress here in the US, are you gonna stop buying wine? No. Okay. If the Republicans are fully in control, are you gonna stop buying wine? Nope. Nope, nope. Is there any scenario in which you will stop purchasing wine? Absolutely no scenario. You won't, right? And I think about myself, right? I mean whatever happens in the November election, I am going to still go buy shinguards for my kids so that they can play soccer, right? And that, and consumers, now are they gonna adjust their spending habits based off of tax rates and tax policies? Sure. Are they gonna adjust based off of inflation? Yes. It doesn't mean that it's not gonna affect things and affect profits, but you have to understand that this has always been going on. Companies will continue to find ways to make money, to be successful, that's what they do. Consumers will still need to spend in some form. It'll go up and it'll go down. But it's not like because something's gonna go into play, things come to a grinding halt. Yeah, absolutely. Life goes on. Life goes on. I'm still paying tuition for my kids in college. You are still paying. Regardless of who's going to be in there, but you know, one thing too, I think that's a good reminder of, we have a tendency to think, "well it's an unusual year cause we have elections." Every two years we're having elections, right? Whether it's the midterm elections or the presidential elections, it's always just part of our cycle that we're going through. So let's take a quick look at the impact of years where we have presidential elections. We kind of just walked through the midyear elections, but let's look at what we've seen in the markets on presidential elections here. Well and you asked me earlier, you said, "look, do you see a pattern who's in control of Congress?" I'll ask you, right? Do you see a pattern in who's in control of the White House? But no. Yeah. I mean, you see some good years, you see a couple down years, but there's no, nothing jumps out. It's the same point. I mean look, one person in the White House that somehow that's gonna have complete control over stock market returns with the millions of other things that are happening in global economies, it's just, that's a really challenging argument to make. And it's the same thing with midterm elections that are coming up here. Is it gonna have an impact depending on it, and the policies that come out? You betcha. But the ability to tease out, here's exactly what's gonna happen in terms of decisions with the government and here's exactly what's gonna happen with stock markets. I mean what you're trying to do there is you're trying to forecast, okay, I can forecast the policies that are gonna come out, exactly the way that it's gonna play out and I can forecast how the market's gonna react to that. That's incredibly difficult to do. Well you highlighted some returns there in mid election years. I got returns for years of presidential elections too. So the year of a presidential election, the average return was 11.6, and the year after higher or lower? It's actually a little bit lower. It's 10.7. Well, okay, so look at that. Right? Earlier we showed, hey, in midterm election years you get a return that's a little bit lower, in the return after the year after you get a return that's pretty darn good. Then you said every two years we get an election. So with presidents I get a return that's a little bit higher and the year after pre presidential presidential elections I get a return that's a little bit lower. I mean, trying to make sense of that and then figuring out when to be in the markets and when to be out. And let's remember every single one of those average returns that we cited, midterm election years, year after presidential election years, and year after, they were all positive on average. So sort of regardless of my views politically, I want to capture those returns in my long term return of capital markets. Yeah, absolutely. And to clarify, not every year... No. was positive, but... Not at all. You know, in aggregate it was very, very nice returns there from that experience. Now one thing you mentioned is the global economy. So let's almost expand the conversation, even outside the US and we had a colleague, Christian Newton, who was having a conversation with an investor. He was speaking at an event and this investor came up after and he says, "you know, I've done a tremendous amount of reading in research around two countries, the US, from a political perspective, the US and India." And he goes, "I'm very well-versed on where we are politically in those two countries and I'm incredibly concerned about what's going on within the countries and what it's going to mean for my portfolio and should I make a change." And I love the way that Christian talked to him about it. He said, well they were talking for a little bit. He says, "well, but tell me about the rest of your portfolio. Like are you a global investor? Are you diversified all around the world?" He goes, "well yeah, I own almost all the countries out there developed in emerging markets." He's like, "okay, so you have this idea of the curse of knowledge in the sense that you're so intimately knowledgeable about what's happening in your two countries, it makes you nervous, yet there's probably 40 plus countries out there you're not as knowledgeable on, but you're comfortable with what's going on there." So it's kind of an interesting perspective, but then also take the position of citizens in all the other countries around the world. I'm sure they're just in the situation with us too, when they have the elections, right? They have very strong viewpoints, perhaps about one party or another. But all of that, again, is reflected in prices on a global basis. Well, and and his description there of the curse of knowledge, I think that that's a great thing. I mean, again, it doesn't mean you don't wanna be very well educated on things that are going on in your country or other countries, but sometimes when you feel like you're so well educated and you have so much knowledge in a particular topic at a particular area, you then think that that can translate over perfectly to making great investment decisions and, again, you just want to be very cautious, especially as we're talking about politics, right? What I'm concerned about as a citizen of a country, and the way that I vote, may be different from the questions I want to ask as an investor. Well, and I think it also go back to the idea that information isn't price. And you know, Bob Merton, who we work with here, is the Nobel Prize winner and we work with him here at Dimensional. And I love the quote he says that "the market, the global market is your, it's the most complete source of information out there." So the things that we usually get worried about, whether we're reading about politics or anything else around the world, who else is reading it? Everybody. If you're having the conversation and asking the que... I mean, it goes back to the question about taxes, right? If you are asking a question about taxes, so are millions of other people. And that idea is currently baked into stock market prices. Now again, as new information comes out, market prices will adjust. But that's a good reminder that if you are asking the question and thinking it, so are millions of other investors and some expectation is currently baked into what we see in market prices. Yep, absolutely. You know, by the way, I'm looking at this slide: William Clinton... I'm not sure I've ever heard him called William Clinton before. We wanted to be very official with that. When we did notice that though, right before we came on, we said, "William Clinton? That's kind of a Little different. Little interesting. But anyways, we'll we'll move on from that. Okay. Yeah, we'll move on. But listen, I'll go back to your point on again, it's you feel like you know so much and you wanna let it translate over and if you relate it back to the presidents, you know, and I look at just the long-term growth of wealth that we've seen over time with the presidents there and, as we say repeatedly, what markets tend to do is they tend to go up into the right and that's, yes, it's incorporating the political piece of it, but it's many other factors and that the president or the Congress is gonna control it, and again, I always look at a chart like this and I say markets go up and to the right, I got a view on the world, but I also have a view as an investor and I wanna capture those returns. Yep. Okay, so let's take a little bit different look here on some things. And if you're an investor that says, "you know what, I am gonna make a change in my portfolio based on who is in charge of Congress, and we'll stick to Congress right now because that's driving... Yep. Yep. We're in the midterm elections here. So what are the implications of that? If you say, "okay, I'm gonna get outta the market if somebody's in control of Congress and I'll get back in when they're back in control of Congress," how do I think about that as an investor? I like doing this thought experiment. You know, if we pull back up the slides and we go back into it and Mark, I wanna reference back to a slide that you had showed earlier, right? This is the one that we kind of kicked off with, who's in control of Congress and individual years. And if we consider that, let's do this thought experiment. So you know, we've got these periods here where we have Democrats in control as represented by blue. We've got Republicans in control as represented by red. And then we've got, you know, the mixed control of Congress as we saw here. And and what if you said, "Hey listen, you know, when the Democrats are in control, I really, I don't feel like they're gonna do a good job running the government and for the economy and for the stock market. So you know what? I don't believe in them and I wanna be out of the market during that period of time." So during those times when, Democrats are in control, what's gonna happen here is actually I'm gonna get the return of treasury bills over this time period. And what we can see here in terms of that growth, this is what would've happened. And again, if you look at the end of that red line, you see that flat part there? That's saying, "Hey, Democrats currently control Congress. I don't believe that they're gonna do a great job. And guess what? I got the T-bill return during that period." So that first run in this one, the blue, I get a T-bill return, that middle one I get a T-bill return at the end I get a TBI return. Republicans are in control and a mixed congress, I'm all for that and I get the return of the market. Great. Okay, well let's flip it around. Now let's say that I don't like what the Republicans do. So that big stretch there in the middle of this graph, the nineties and the two thousands, you know what, I don't believe that they're gonna do a great job and and do positive things for the economy in the stock market. So you know what? I'm out the market during that period and here's what you would've seen over that period. And interestingly, you know, you take a look at this and there's something that definitely jumps out on this chart and I want to be very careful 'cause you and I talked about this ahead of time, that people may draw conclusions from the lines that they're seeing right here. Yep, absolutely. I mean it looks in this case that if you look around 2011, you start to see this separate with the Republicans over the Democrats. And so it might be just a question, well, okay, so should I use that as a signal? We go back to that about if Republicans are in control of Congress, might that influence markets a certain way? Well, and let's, so just to be fair, and you're right, you know, you look at a chart like that and I know that everybody's watching, may say, "Hmm, looks like one of those parties does a little bit better job for the stock market." Couple things to note on that. There's actually three more years in that analysis from '87 that the Republicans were in control. And look, if markets have positive returns on average, then you give 'em three more years, you might expect it to be up a little bit more. And again, I'll go back to, you know, look, that '08 time period, we had Republican control of Congress leading up to it. Democrats come, and come into control and in '08 we knew we got negative returns. Maybe it's a bad luck of the draw. Did they have something to do with it? Maybe. Did the Republicans leading up to it have something to do with it? Maybe, right? So there's just, again, there's gonna be a randomness. But I would challenge our viewers that I don't even think that that is the accurate comparison. I don't believe that that's what they should be comparing to. Because really what I want to think about is, is that I want to capture returns as an investor regardless of the environment that I'm in. And in this chart right here, what we're gonna show is, is that you see that white line that's if I stay invested during all of those periods, regardless if the Democrats are in control, the Republicans are in control or it's a mixed congress. And as I look at that kind of, that delta between the white line and either the red or the blue, I think about that as that is my opportunity cost of voting with my investments versus voting with my ballot. We have said it repeatedly, I believe we live in a wonderful, I believe we live in a wonderful country. I love the fact that I can be educated on different policies, identify candidates that I believe align more closely with what's important to me and what's important to my family, and I can get out and vote and I can do that in local elections, I can do that in state elections, I can do that in in national elections. I think that is a wonderful, wonderful thing. And when you identify things that are important to you, you should get out and vote for those candidates. As soon as you start to let that carry over to your investment decisions and say, "I'm in the market, I'm out of the market, I don't think this party's gonna do a great job and therefore I don't wanna stay invested and stay disciplined." You can really have a detrimental effect on your financial outcome and you want to be careful going down that path. Yep. And the chart we just looked at shows that very nicely and you did a really nice job summarizing some of those key takeaways and, Jake, somebody was listening very closely and they wanted to make sure they get this right, they thought they heard you say the comment something like "what we experience as consumers, should not drive our actions as an investor." And that's well said and I think you said something like that. You never remember exactly how you say something, but I would also adjust that to say "what we're experiencing as citizens, and our viewpoints, should not impact the decisions we make as an investor, as well." Your best chance, have an investment plan and stick to it and let the markets work for you. That's right. And just again, just to clarify on that investment piece of it or on the inflation piece of it, again, it's not that inflation doesn't have some impact on stock market returns, but just remember what you're feeling as a consumer and the inflation numbers you're seeing, those are actually backward-looking over the last year and as an investor, the questions you want to be asking are really more of a forward-looking nature. So it's not that it's not important, but then deciding on inflation is X and I'm gonna be either in the market or out. It's kind of the same thing of Democrats are in control or Republicans are in control and I'm gonna make a decision on being in the market or outta the market or make a change. Gotta be very careful doing that. Yep, absolutely. Great summary. Hey, let me address a couple questions here very quickly. Now one came in about the slide deck, Yes, the slides are available. You can just go to that little event resources tab and download the slides there. And then just clarifying your question here, "when we say mixed, what does that mean?" It's just when there was nobody in complete control of Congress. That's right. In between the house and... That's right. The Senate. Okay. So Jake, great job summarizing all of that. Appreciate it. Hey and thanks everybody for joining us here today. A couple things: There were some questions that came in there that were very unique to somebody's individual circumstances, so it's hard to answer those. But great opportunity to reach out to your advisor, they'll be able to work with you on anything that might be appropriate to consider for your individual portfolios from various investment perspectives. And then the other thing I wanted to highlight here too is we'll be posting this webcast probably in a few days. If you perhaps have some friends or colleagues that it'd be worthwhile for them to look at, go to dimensional.com. It'll be up there, here in a couple days. And then the last thing I just wanna do, you know, our thoughts and prayers go out to everybody there on the east coast that just went through the hurricane in Florida and obviously what's coming up there in the states there on the eastern seaborne, so we wish you all safety. And with that, everybody, have a fantastic rest of the day and great weekend. Thanks for joining us today.