Are Politics Good or Bad for the Investment Markets? You Decide!

Are Politics Good or Bad for the Investment Markets?  You Decide!

With midterm elections less than two months away, a divisive political atmosphere and the aging bull market have investors particularly on edge.

The vote to be held on November 6th comes at a time of unusually high political uncertainty with both houses of Congress at stake and key economic issues such as trade and taxes in the balance.

According to the Wells Fargo Investment Institute, the S&P 500 sees an average pullback of nearly 19% in midterm-election years, based on data going back to 1962 (or 14 midterm cycles).

However, in the year after the mid-terms, the S&P climbs more than 31%, on average. 

Craig Holke, an investment strategy analyst at the Institute writes, “It does not matter which party was in charge before or after the midterm election.  The removal of uncertainty and of constant media attention allows markets to resume focusing on fundamentals.”

S&P 500 and midterm elections