Here's how much this presidential election really impacts your portfolio

The next U.S. president can pick Supreme Court Justices, change the tax code, upend your investment portfolio, overhaul health care and one of those things isn't true. Can you guess which one? Actually, if Congress remains gridlocked, the answer may be none. But the one we had in mind was your portfolio. Certainly, the winner's political party hasn't made a big difference in stock market returns over the long run. Variations in the market's performance under Democratic and Republican administrations, measured by the average of yearly returns over more than 160 years, are so small as to be negligible, said Vanguard senior investment strategist Jonathan Lemco, a former professor of political science at Johns Hopkins University. Mr. Lemco looked at market data from 1853 to now and found this: A recent survey did show that the election is causing U.S. voters high anxiety. But according to readings of the CBOE Volatility Index, or VIX, the level of market anxiety is pretty normal, said Mr. Lemco. Volatility "hasn't exceeded normal levels for a presidential election year, and there is no indication that it will deviate from typical patterns after the election," he wrote in a recent report. That's not to say the twists and turns of a tumultuous election season don't move the markets in the short-term. On Friday, after FBI Director James Comey said the bureau was making further inquiries into Hillary Clinton's use of private e-mail when she was secretary of state, the S&P 500 fell sharply, then bounced back to end down just 0.3%. In the longer term, it isn't clear where the FBI review may yet lead, or how financial markets would react to an unexpected victory for Donald Trump. Historically, though, stock market investors have been able to look forward to relief rallies in the year after a new president is sworn in. The market has risen an average of 6% during the first year of a new presidential term, according to Stephen Suttmeier, a technical research analyst at BofA Merrill Lynch Global Research. Bonds don't see much of an impact from the election of a Democrat or Republican president either, Mr. Lemco said, based on data going back to 1972. It's the Federal Reserve that primarily drives the performance of the U.S. fixed-income market, and "our research shows the Fed has been active in several recent presidential election years, having lowered and raised rates. So its behavior doesn't deviate much from that of other years." "Bottom line, a U.S. president is not a king," Mr. Lemco said. "Let's keep in mind as investors that the election of a president is only one important input. The others, most importantly, are market valuations at the time of the election, followed by globalization, technology, demographics. And then there are all kinds of external events that play a meaningful role." For example, he said, the S&P 500 Index had some of its strongest gains under Gerald Ford, but that was mostly because the bear market of the early 1970s ended soon after Mr. Ford took office, leaving stocks attractively valued. Mr. Lemco, who has dual citizenship in the U.S. and Canada (cue the Trump joke), said that "with his political science hat on, the election is fascinating." But, he noted, "it's caused angst for all of us."