Despite dire warnings from former President Donald Trump, the US stock market has continued to soar under the Biden administration, generating massive gains for millions of Americans' retirement and investment accounts. Contrary to popular belief, the data shows that the market has historically performed better under Democratic presidents, with the Biden-era gains ranking as the second-best in modern history.

Defying Expectations, the Biden Bull Run Continues

The Trump Market Surge and Biden's Unexpected Outperformance

In the lead-up to the 2020 election, former President Trump warned that a Biden victory would spell disaster for the booming stock market. However, the reality has been quite the opposite. Since Biden's election in November 2020, the S&P 500 has posted a remarkable compound annual growth rate of 14.1%, according to veteran market strategist Sam Stovall of CFRA Research. This performance ranks as the second-best in modern history, surpassed only by the tech-fueled gains during the Clinton administration in the 1990s.The market's resilience under Biden is all the more surprising given the relatively low marks Americans have given the current president on economic issues. However, Stovall attributes the Biden-era gains to the US economy's relentless rebound from the pandemic, the historic period of low unemployment, and the artificial intelligence gold rush on Wall Street.

The Trump Market Boom and Its Drivers

The stock market also experienced a significant surge during the Trump presidency, with the S&P 500 enjoying a compound annual growth rate of 12.1% from Trump's surprise election in November 2016 through Biden's 2020 victory. This places the Trump-era market performance as the third-best in modern history, behind only Clinton and Biden.Stovall attributes the Trump market's strength to a combination of very low inflation, very low interest rates, and the administration's signature tax cuts. These factors helped to juice corporate profits and fuel investor optimism, leading to the market's impressive gains.

The Enduring Strength of the Democratic Market Advantage

Contrary to the popular belief that Republican presidents are better for the economy and the stock market, historical data shows that the market and the broader economy have consistently performed better under Democratic leadership. The S&P 500's growth rate under Democrats is 10%, compared to just 6.7% under Republicans, according to CFRA. Similarly, gross domestic product has averaged 3.9% under Democratic presidents, well ahead of the 2.4% under Republicans.This disparity may be partly explained by the fact that none of the Democratic presidents since 1945 have had a recession occur during their terms, while Republican presidents like Richard Nixon and George W. Bush have had to contend with economic downturns. As BMO Capital Markets' chief investment strategist Brian Belski notes, "Whether it is by coincidence or causation, historical evidence suggests that the market and economy perform better under Democratic presidential leadership."

The Role of Gridlock and Tax Policy

The composition of Congress also plays a significant role in shaping the market's performance under a given president. Investors often embrace the concept of "gridlock is good," as it prevents the White House from enacting controversial legislation that could disrupt the economy. Indeed, Stovall found that the best market performance historically has occurred under a Democratic president with a split Congress, where the S&P 500 has enjoyed a sizzling growth rate of 16.8%.However, the relationship between tax policy and market performance is more nuanced. Contrary to the prevailing wisdom, BMO's research found "little proof" that lower individual, corporate, and capital gains tax rates boost the market. In fact, the market has generally performed better during times of higher, not lower, tax rates across changes in all three categories.As with many aspects of the economy and the markets, presidents often receive too much credit or blame for the ebbs and flows. While their decisions and landmark legislation can have a real impact, the markets are influenced by a multitude of factors, including wars, interest rates, and the timing of recessions. Nonetheless, the data suggests that the Biden-era stock market boom has defied the doomsday predictions and continues to defy conventional wisdom about the relationship between politics and Wall Street.

In the ever-evolving landscape of the stock market, two companies have emerged as potential powerhouses poised for remarkable growth. Meta Platforms and Axon Enterprise have both experienced staggering share price appreciation over the past five years, outpacing the broader market by a significant margin. As these companies continue to innovate and solidify their competitive positions, investors are closely watching for potential stock splits that could unlock even greater value.

Unlocking the Potential: Meta and Axon's Impressive Trajectories

Meta Platforms: Dominating the Social Media Landscape

Meta Platforms, the parent company of Facebook, Instagram, and WhatsApp, has firmly established itself as a global leader in the social media industry. With over 3 billion unique visitors each day, Meta engages a staggering 40% of the world's population, creating a vast trove of data that fuels its advertising business. The company's relentless focus on artificial intelligence (AI) has further strengthened its value proposition, driving increased user engagement and improving campaign outcomes for advertisers. As Meta continues to innovate and leverage its AI capabilities, Wall Street analysts remain overwhelmingly bullish, with 85% of the 71 analysts covering the stock rating it as a buy.

Axon Enterprise: Revolutionizing Public Safety

Axon Enterprise, known for its iconic Taser brand, has evolved into a comprehensive public safety solutions provider. Beyond its market-leading conducted energy devices, Axon offers a suite of sensors, including body-worn cameras and in-car dash cameras, that integrate seamlessly with its software ecosystem for digital evidence management, report writing, and real-time operations. The company's recent introduction of a generative AI service, Draft One, has further solidified its position as a trailblazer in the public safety technology space. With 93% of the 15 analysts covering Axon rating the stock as a buy, the company's growth prospects remain highly promising.

Potential Stock Splits: Unlocking Value or Merely a Sideshow?

The remarkable share price appreciation of both Meta Platforms and Axon Enterprise has fueled speculation about potential stock splits. While stock splits can often generate excitement and attention, their long-term impact on a company's performance is often negligible. What truly matters is the underlying strength of the business, its competitive positioning, and its ability to generate market-beating returns. Both Meta and Axon have demonstrated their prowess in these areas, and their outperformance could continue as they invest in cutting-edge technologies like AI.

Navigating the Investment Landscape: Opportunities and Considerations

For investors, the decision to invest in Meta Platforms or Axon Enterprise should be based on a thorough analysis of the companies' fundamentals, growth prospects, and valuation. While Meta's current valuation of 29 times earnings appears reasonable, Axon's valuation of 98 times adjusted earnings may be considered rather expensive, despite the company's impressive growth trajectory. Investors should carefully weigh the risks and rewards associated with each investment, considering their own risk tolerance and investment objectives.Ultimately, the potential for stock splits in Meta Platforms and Axon Enterprise is just one aspect of the broader investment thesis. The true value lies in the companies' ability to innovate, adapt, and maintain their competitive edges in their respective industries. As these companies continue to push the boundaries of technology and solidify their market positions, savvy investors may find compelling opportunities to capitalize on their long-term growth potential.