It seems that federal government shutdowns are becoming more frequent. Perhaps it’s a consequence of the decline of the collaborative process in a nation that’s becoming increasingly polarized politically. Whatever the reason, investors undoubtedly would like to know how the current shutdown might affect their portfolios. I wish I had the answer. But we can look back to recent stalemates to get a sense of their impact on the stock market.

The longest federal shutdown in U.S. history occurred during Donald Trump’s first presidency over a dispute with congressional Democrats over funding for a border wall between the U.S. and Mexico. It began in December, 2018 and lasted for 35 days. In spite of the political chaos, the S&P 500 actually gained 10.3% during that period.

The second longest shutdown began in December 1995, again fueled by a standoff between the President (Bill Clinton) and Congress (this time controlled by Republicans) over government spending cuts. After its 21-day duration the S&P 500 had lost 3.7%.

A 16-day shutdown was brought about in October 2013 by a dispute over Obamacare. House Republicans refused to vote on a spending bill unless it included a provision to delay or defund the government’s new health insurance program. During that period the S&P 500 rose 3.1%.

What can we make of this data? While the federal shutdowns may have had some impact on the market’s performance, clearly there were other factors influencing investor sentiment that led to the disparate results. That’s always the problem when trying to guess how the stock market will perform during any future period.

However, unless you’re a day trader, the S&P 500’s performance during these relatively short periods of time is nowhere near as important as how it did afterwards. And that data is consistently better. Twelve months after the 2018 shutdown, the S&P 500 had gained over 26%. After the 1995 shutdown it had risen by over 22%. And one year after the October 2013 shutdown, the S&P 500 had returned nearly 20%.

Although stocks performed well after the longest federal shutdowns in recent history, that doesn’t mean they will do so this time. If anything, this data should serve to make clear that there is a myriad of factors that affect future stock prices. Perhaps a takeaway might be that previous markets have tended to discount political events more than other types. But it’s also important to recognize that a protracted shutdown can have economic consequences as well.

As always, rather than trying to react to short-term events, maintaining a portfolio that is well-diversified and more resilient to external events will not only keep it less volatile but make your financial life less volatile as well.

(Artie Green is founder of Cognizant Wealth Advisors dba Perigon Wealth Management, LLC, a registered investment advisor. For more information visit cognizantwealth.com. More information about the firm can also be found in its Form ADV Part 2, which is available upon request by calling 877-977-2555 or by emailing compliance@perigonwealth.com).