There is something mystical about the election process. Billions of dollars are spent to tell us the arc of the universe hinges on a single moment, the many voices of the people unite in a barely decipherable chorus, and the worst ideas developed by distant think tanks are brought to light. Somehow elections allow doomsday, utopia, and natural law to coexist for ever greater stretches of the calendar year. In other words, elections are a unique time when superstition must exist alongside effective decision making.

Balancing the role of myth within the decision-making process has been a challenge since the dawn of time. When you do a deep dive into history, you discover a strange dichotomy where people can be highly intelligent and technically gifted, but also have a very strange thought process. I’m not talking about opinions on the Great Mysteries such as the existence of God, the ideal form of government, etc. I’m talking about the ways people determine to march an army down a particular road and the absence of basic math.

One of my favorite examples is Greek generals during battle. Let’s set the stage a bit. Imagine sending a report to your boss about the solution to an important problem. Your boss then calls you to his office to talk about it.

When you arrive at the boss’s office you are welcomed to a gruesome scene. Blood is splattered on a desk and your boss is poking the entrails of a small animal with a company pen.

“Is everything okay?” You ask.

“I loved your report,” The boss answers, “but this is a very important decision, so I need to make sure the timing is right.”

You notice some lifeless bundles of fur in the corner of the office. Three squirrels have already been sacrificed on the alter of timing. Change scene.

It’s the year 479 BC. You’re a Spartan hoplite braving the heat and sun beating down on you while you watch thousands of Persian infantry march towards your battleline.

“General Pausanias!” You shout, “The Persian lines are in disarray as they march! Should we attack?”

“Wait, let me check the omens.” Pausanias answers. Five dead goats later, you finally receive orders to advance.

Now, back in the late 19th and early 20th century, historians were adamant that sacrifices were a tool used by highly rational elites to control the superstitious masses. You don’t need the scientific method to see there is no correlation between battle tactics and entrails. Surely Pausanias was manipulating his men into thinking Zeus was on their side through these omens.

Today, most historians recognize humans are complicated and would say Pausanias believed he was facing a critical moment, and thought seeking the counsel of the gods/fortune through an animal sacrifice would help his decision making. But historians would also note that goat casualties had no impact on Pausanias’ eventual victory.

So, a few months ago when a highly educated and credentialed person told me, “I don’t make decisions about my portfolio before an election,” my mind went to Pausanias and his animal sacrifices.

Compared to animal sacrifices, it seems much more plausible that election years and who wins has an impact on market returns. We know there are baskets of policies that allow nations to prosper, put them on life support, and even torpedo their economy for generations. A candidate or party advocating for these policies must be good/bad for the market.

Unfortunately (or fortunately), that doesn’t appear to be the case. Above is one of my favorite charts to show clients this year. The main point is that it shows presidential elections going back to 1928 and the election year market return. The average election year return of 11.63% is higher than the average S&P 500 return of 10.3%. There might be a little more turbulence in the months prior to an election than a normal year, but the end outcome is not significantly different from any given year. Well, if you could compound the 11.63% return over a long period of time it’d be significantly better, but you know what I mean.

There are many reasons to make or not make a change to your portfolio. An election year is not one of them.