{"id":17671,"date":"2026-11-05T09:23:00","date_gmt":"2026-11-05T09:23:00","guid":{"rendered":"https:\/\/tomfarandasfolly.com\/?p=17671"},"modified":"2026-11-05T05:01:37","modified_gmt":"2026-11-05T05:01:37","slug":"what-the-midterm-results-can-mean-for-your-investments","status":"publish","type":"post","link":"https:\/\/tomfarandasfolly.com\/?p=17671","title":{"rendered":"What the midterm results can mean for your investments"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>This is my line of work!<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Most but not all of this data was gathered by a GeminiAI search. <em>PerplexityAI furnished virtually the same results with a slightly different formatting. <\/em> This analysis is no guarantee of future results.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Stock market performance after a midterm election.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Since 1950, the U.S. stock market has exhibited an exceptionally strong and consistent track record in the months following midterm elections. In fact, the 12-month period following a midterm election has historically been one of the strongest stretches of the four-year presidential election cycle.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The quarter of the election and the next two quarters are historically the strongest nine months of the election cycle for stocks. Small stock indexes often outperform the S &amp; P this was not the case in the 2022 cycle as small stocks trailed the S &amp; P by 10%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Across all 19 midterm election cycles from 1950 through 2022, the S&amp;P 500 has posted positive returns 12 months later in <strong>100% of cases<\/strong>:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Market Index<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><td><strong>Time Horizon Post-Election<\/strong><\/td><td><strong>Average S&amp;P 500 Gain<\/strong><\/td><td><strong>Win Rate (% Positive)<\/strong><\/td><\/tr><\/thead><tbody><tr><td><strong>1 Month<\/strong><\/td><td>~1.6%<\/td><td>~79%<\/td><\/tr><tr><td><strong>3 Months<\/strong><\/td><td>~7.7%<\/td><td>~89.5%<\/td><\/tr><tr><td><strong>6 Months<\/strong><\/td><td>~14.1%<\/td><td>100%<\/td><\/tr><tr><td><strong>12 Months<\/strong><\/td><td>~15.1% \u2013 15.2%<\/td><td><strong>100% (19 for 19)<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Median 12-month gain:<\/strong> ~14.5%<\/li>\n\n\n\n<li><strong>Best 1-year performance:<\/strong> +33.2% (following the 1954 midterms)<\/li>\n\n\n\n<li><strong>Worst 1-year performance:<\/strong> +1.1% (following the 1986 midterms, which absorbed the October 1987 &#8220;Black Monday&#8221; crash)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Primary Drivers Behind the Post-Midterm Trend<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Resolution of Policy Uncertainty:<\/strong> Markets generally dislike ambiguity. The months leading up to a midterm vote often bring elevated volatility as investors price in potential changes to tax codes, regulation, and trade policy. Once ballots are counted, certainty returns\u2014regardless of which party wins.<\/li>\n\n\n\n<li><strong>Divided Government &amp; Legislative Gridlock:<\/strong> Midterms frequently result in the president\u2019s party losing seats, leading to a split Congress or divided government. Wall Street often views legislative gridlock favorably because it diminishes the likelihood of sweeping, disruptive tax hikes or major regulatory overhauls. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/li>\n\n\n\n<li><strong>The Presidential Cycle Effect:<\/strong> Year three of a presidential term historically tends to be the strongest calendar year for equities, as administrations focus on economic stability and market-friendly measures ahead of the next presidential campaign.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Key Caveats for Investors<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Midterm Years vs. Post-Midterm Years:<\/strong> While the 12-month stretch <em>after<\/em> midterms has a spotless track record, the calendar year leading up to Election Day is often choppy and prone to pullbacks (notably cycles like 2018 and 2022).<\/li>\n\n\n\n<li><strong>Fundamentals Rule Over Politics:<\/strong> While the historical pattern is compelling, long-term market performance remains dictated by corporate earnings, Federal Reserve interest-rate policy, inflation &amp; broader macroeconomic conditions rather than election outcomes alone.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Emphasizing again,<\/em> <em>most but not all of the above data was gathered by GeminiAI search. PerplexityAI furnished virtually the same results with a slightly different formatting.  This analysis is no guarantee of future results.<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>This is my line of work! Most but not all of this data was gathered by a GeminiAI search. PerplexityAI furnished virtually the same results with a slightly different formatting. This analysis is no guarantee of future results. Stock market performance after a midterm election. Since 1950, the U.S. stock market has exhibited an exceptionally &#8230; <a title=\"What the midterm results can mean for your investments\" class=\"read-more\" href=\"https:\/\/tomfarandasfolly.com\/?p=17671\" aria-label=\"Read more about What the midterm results can mean for your investments\">Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-17671","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=\/wp\/v2\/posts\/17671","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17671"}],"version-history":[{"count":2,"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=\/wp\/v2\/posts\/17671\/revisions"}],"predecessor-version":[{"id":17673,"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=\/wp\/v2\/posts\/17671\/revisions\/17673"}],"wp:attachment":[{"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tomfarandasfolly.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}