MINT HILL, NC – This week I would like to talk about the upcoming midterm election on November 8th…Dun Dun Dun. We will pick back up with our financial planning series next week. I love this quote from Mark Twain, “History doesn’t repeat itself, but it does rhyme.” What has the correlation been between midterms and markets in the past?
While markets are impacted by a variety of forces, such as inflation, the direction of interest rates or the state of the job market, the subdued returns prior to elections and generally higher volatility are likely explained by the fact that markets don’t like the uncertainty from potential policy changes. Regardless of the outcome of the elections, market returns for the one year following midterms and over the long term have historically been strong. Many may think that’s all in the past, and this time is different. Indeed, there are many important issues facing our country today; however, markets don’t see red or blue, only green.
Remember this… the factors that will dictate the markets include interest rates set by the Federal Reserve, continued innovation, and ongoing consumer spending, not simply elections. Nearly a century’s worth of data has shown using elections alone to make investment decisions is likely to lead to unreliable investment results…Dun Dun Dun.
This article was written by AssetMark for use by your local Cambridge Investment Research Financial Advisor.
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