Mid-Term Elections & Historical Markets Reactions

Prior to the elections basically going the way most pundits projected (with the House switching to the Democrats and Republicans retaining the Senate), there was a lot being written about the potential impact of the mid-terms (and the historical instances of strong market performance following the uncertainty being replaced by clarity after the elections).  This chart shows that since the 90’s the markets have averaged approximately 5% from the election to the end of the year.  This one shows that in the 18 years following mid-term elections since WWII every one of those years has seen positive returns in the markets.  As always, past performance is no guarantee of future returns, but that combined with the economic activity data don’t seem to warrant a meaningful move out of equities (except for any amounts needed for near-term distributions, of course).  Today as the first day after the results had the Dow up almost 550 points.

Midterm Elections Outlook and Midterm Elections - 5 Charts