Someone recently asked me how often the U.S. presidential election occurs. This question may seem simple, but the market impacts behind it are worth understanding in depth.

The U.S. presidential election is held every four years, which has become the most important cyclical event in American political life. The entire election process is divided into several stages: from February to June is the primary season, when the Democratic Party and the Republican Party each hold primaries and caucuses to determine their respective candidates. In July and August, the two parties hold national conventions to officially nominate the presidential and vice-presidential candidates. After that, it enters the general election phase, during which candidates campaign nationwide. Finally, there is the Electoral College vote; the U.S. has 538 electoral votes, and a candidate needs to win more than half—that is, 270 votes—to be elected.

In reality, the impact of this four-year election cycle on the stock market follows a fairly regular pattern. According to research by U.S. Bank analysts based on data since 1930, the stock and bond markets usually perform weaker in the year before the election, while volatility is higher in the election year. Stock market returns in the first year after the election often also decline slightly.

But there is an interesting phenomenon: the stock market’s reaction to which party comes to power is not as sensitive as people might think. When a new party comes into power, the stock market rises by an average of 5%; when the same president is re-elected, the increase is about 6.5%. The difference isn’t significant. What truly affects the market is not the political stance itself, but policy adjustments. Changes in policies in four key areas—fiscal, monetary, markets, and trade—are what produce real effects on the real economy and stock market valuations.

For investors, rather than getting caught up in the fights between candidates and parties, it’s better to closely watch the policy changes that could be affected by the election. The cyclical nature of the U.S. presidential election every four years means investors need to plan ahead: remain alert to market volatility in election years, and understand that volatility itself does not necessarily indicate bad news. The key is to build a long-term investment portfolio plan, adjust strategies according to shifts in macro policy, and not be swayed by short-term market sentiment.