Despite the differences in political philosophies, the one thing both Republicans and Democrats can agree on is economic prosperity. Everybody wants to gain more wealth. Therefore, for stock market investors, having political gridlock tends to be wonderful for returns.
No party can always get what it wants. And when one party does get what it wants, it is always a watered-down version due to the need for compromise.
Historically, stock market returns have been especially good when a Democrat is in the White House and Republicans control at least one chamber of Congress. With Joe Biden as President, this is likely exactly what we’re going to get.
Let’s check out the data and see what the historical average stock market returns are when there’s political gridlock.