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Writer's pictureAvory Team

Equity Market Trends During Election Seasons: Small Caps Advance





Data #1

Historically Market Ramps Post Election



Why does this data matter?

The chart above illustrates stock market performance 12 months before and after an election, compared to non-election years and typical seasonality. During election years (dark blue), markets tend to rally in the months leading up to the election, stabilize, and then push higher 3-9 months afterward. This aligns with the idea that markets dislike uncertainty, and once the election is over, participants can better navigate the environment with more clarity.


 


Data #2

Republicans Perform Better Right After but Democrats Ramp After…



Why does this data matter?

The next chart highlights market returns based on political party outcomes. While there are many ways to interpret this data, choosing the timeframe can provide a variety of outputs. Since 1928, markets have tended to perform well in the four months following a Republican win, whereas after a Democratic victory, markets generally see stronger performance from the election date through the following 12 months.


 


Data #3

Small Caps Lead the Way 1 Year Post Election


Why does this data matter?

Lastly, when comparing small caps to large caps, it’s clear that small caps tend to outperform during election years—particularly six months and one year after Election Day. This is especially relevant for our portfolio, as we believe the best opportunities lie within mid- and small-cap companies today, ranging from $1 to $15 billion in size. Historically, these companies have delivered a 20.1% return in the 12 months following an election.



 

About Avory & Co.

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Avory specializes in high-conviction equity strategies, emphasizing Secular Growth and Transformation Stories driven by exceptional teams. Data guides decisions. We cater to high net worth investors, family offices, and institutional investors. Note: This information doesn't constitute a recommendation to buy or sell any mentioned securities. Avory is based in Miami, Florida with clients all across the globe.


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Disclaimer: Not a recommendation to purchase or sell any securities mentioned. This is for educational purposes only.


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