Election outcomes often trigger sharp swings in stock markets, as investors react to political headlines and uncertainty. But Warren Buffett, who has lived through 16 US presidencies over his 96 years, has long maintained that election results should not dictate investment decisions. He once explained why political outcomes have little bearing on how he approaches the markets.
In 2018, the US midterm elections saw Donald Trump-led Republicans expand their majority in the Senate, while Democrats took control of the House of Representatives. At Berkshire Hathaway’s annual shareholder meeting that year, Buffett was asked about the growing political divide in the US and its implications for the country's future.
“Multiple times in my life, people have felt the country was more divided than ever,” the market veteran said. He noted that since his young venture into the stock market at the age of 11, he has lived under 14 out of the 44 Presidents US has had. As of now, the count stands at around 16 Presidents, including Joe Biden's term (2021-2025) and Trump's ongoing second Presidency.
“And 14 of the 44 have been during this period when that $10,000 became 51 million. Seven have been Republicans, seven have been Democrats. One has been assassinated, one has resigned under pressure,” Buffett said at the shareholders’ meeting.
The legendary market investor explained that the stock market has gone through multiple crises- from Cuban Missile Crisis, nuclear weapons panic to 2008 financial crisis and more. “And through it all, America - in fits and starts, but America really moves ahead.”
Expressing his firm belief in America, Buffett added that there will be lots of disagreements and people will have the feeling after every election that the world is coming to an end. “I have seen a lot of American public opinion over the years. I have seen a lot of media commentary. I have seen the headlines. And when you get all through with it, this country has six times the per capita GDP growth that it had when I was born,” he added.
His long-term partner Charlie Munger also joined the discussion, saying that there is a tendency to say that our present politicians are much worse than the previous ones. “But we tend to forget how awful our politicians were in the past,” he quipped.
Democrats have secured an early victory in their bid to regain control of the Senate after two years of President Donald Trump's administration. Early results began to offer an indication of the midterm outcome, with the campaign shaped by voter concerns over the rising cost of living and higher fuel prices following the US-Israel war against Iran.
Early trends are also hinting at a Democrat win in the House of Representatives. This would mean Democrats’ control over the entire Congress, marking a major setback for US President Donald Trump’s Republican party.
