In this video, Mike Walther of Oak Wealth Advisors examines historical stock market performance during midterm election years, presidential election years, and non-election years.
Mike also looks at long-term S&P 500 performance under different political leadership and explains why economic growth, corporate performance, technology, and productivity are important drivers of the market. The goal is to put election-related market concerns into historical perspective and help investors stay focused on their long-term financial plans.
Transcript:
Hi, I’m Mike Walther from Oak Wealth Advisors, with our perspective on what we think is going to happen to the investment markets following the midterm elections.
If you’re following social media or other media outlets, you might expect some dramatic impact based on who gets elected. The reality is probably going to be quite a bit different. But rather than take my word for it, let me share the data with you.
What’s happened in prior years with midterm elections? As we can see in this chart, represented by the beige columns, if you look back at all the midterm election years going back to 1933, the average return for the U.S. stock market has been about 8.6%, slightly below the historical average. If we exclude 2002 and 2008, which were recent and very volatile years for the stock market, that average jumps to 10%, very close to the historical average for the U.S. stock market.
Looking ahead beyond this November into 2027, which will be a non-election year, we actually see performance jump to about 16%, the best average return among these categories for U.S. stocks. So what we can see here is that there’s no reason to panic during the last two months of this year. In fact, there is reason to be optimistic about 2027, regardless of the election outcome. In presidential election years, which we’ll see again in a couple of years, average returns fall somewhere between the two.
Typically, midterm election years are the most volatile and have the lowest returns. Those returns are still very respectable, and the best year is just around the corner if we look at historical patterns.
If we look at this another way, we can see the growth of the S&P 500 since 1926 has been very gradual and positive. This is a logarithmic chart, meaning the scale adjusts to show percentage changes more consistently over time. If we expanded it onto a standard scale, the line would look more like a hockey stick, with even stronger growth in recent years.
As you can see, whether under Republican leadership, represented in red; Democratic leadership, represented in teal; or mixed control of Congress and the presidency, there really isn’t one perfect political mix for the markets. The markets have historically gone up under all these political scenarios because they are driven by what’s happening in the economy: How are companies doing? How is technology being deployed? And how productively are workers producing output?
So keep this in mind when you go to the polls in the next couple of weeks. Vote with your heart and follow the policies and candidates that are most important to you. Don’t let concerns about the economic impact of your vote dictate what you do. It’s probably not going to have much of an impact on long-term market performance.
If you have other questions about this or anything else regarding your investments, please reach out to the team at Oak Wealth Advisors. Listen to The Special Needs Voice and follow us on social media. We hope you’ll continue to find our objective advice beneficial to your planning.
All the best.
