Midterm Elections and Your Money: Why Staying Invested Wins
The yard signs have been up for weeks. The mailbox is full of glossy flyers, the campaign calls and texts keep coming, and the ads run between every inning and every quarter. With all that noise, it is natural to wonder: how is the election going to affect my stocks?
It is a fair question. Elections feel personal because they are personal. They touch our values, our communities, and the future we picture for our kids. When something feels that big, it is easy to assume it must show up in our portfolios, too.
So on this Election Day, I want to share what the history actually says. The short version: the market has historically cared a lot less about who wins than we do.
The Real Cost of Sitting Out
BlackRock recently ran a simple but powerful test. They took a $100,000 investment in the S&P 500 starting in 2013 and asked what would have happened under two approaches.
Stayed invested: That $100,000 grew to about $398,000 by the start of 2026.
Went to cash by party: Investors who moved to cash whenever their preferred party was out of power ended up with $186,000 to $214,000, depending on which party they favored.
Read that again. The investor who let politics drive their portfolio ended up with roughly half the money of the investor who simply stayed put. And it did not matter which side they were on. Both versions of "I'll wait this one out" lost.
That is a hard lesson, but it is also a freeing one. You do not have to predict the election, and you do not have to predict how the market will react to it. You just have to stay the course.
What Midterm Elections Have Meant for Markets
Midterm years do have a reputation for being bumpy. Historically, the average annual U.S. stock return in a midterm year has been about 7.5%, compared to 12.4% in other years. Recent memory reinforces that: 2018 finished down 4.4%, and 2022 finished down 18.1%.
But 2026 has written its own story. Through the end of September, U.S. stocks were up 12.75%, the fifth best start to a midterm year going back to 1926. October was a bit rockier. A tech sell-off pulled the S&P 500 down about 1% for the month, and October 30 was its worst day since June. Even so, stocks finished October still up more than 11% for the year. By midterm standards it has also been a calm ride, with only 4 days of 2% moves in the S&P 500 so far this year, compared to 20 in all of 2018 and 46 in all of 2022.
There is another pattern worth knowing. Since 1970, stocks have tended to be choppy in the months leading up to a midterm election, then pick up once the votes are counted. This October fit right in. Markets do not love bad news, but they really do not love not knowing. Once the picture comes into focus, investors tend to breathe a little easier.
What Usually Happens After the Votes Are Counted
Here is the part I find most encouraging. In the six months after a midterm election, U.S. stocks have historically returned an average of 14.1%, compared to 5.7% for the same stretch in non-midterm years.
And what about the outcome itself? BlackRock looked at that, too.
When one party lost full control of the White House, House, and Senate, stocks averaged a 10.4% return over the next six months.
When a party gained control or Congress stayed divided, the average was 16.1%.
Notice what both of those numbers have in common. They are positive. Some outcomes have been better than others, but historically there has not been a "wrong" result for long-term investors. Of course, past performance is never a guarantee of future results, and every cycle has its own wrinkles. But the pattern has been remarkably consistent.
Policy Matters, Just Not the Way Headlines Suggest
It is tempting to think you can pick winners based on who is in charge. History makes that harder than it sounds.
Energy stocks were the worst performing sector under both the Obama and the first Trump administrations, then turned into one of the best sectors under the Biden administration and the current Trump administration. If you had invested based on campaign speeches, you likely would have gotten it backward more than once.
Meanwhile, technology ranked among the top two sectors across all of the last four presidencies, regardless of party. Big economic forces like innovation, interest rates, and corporate earnings tend to matter far more than who wins on any given Tuesday.
This is one of the reasons we diversify broadly. We would rather own the whole economy than bet on which slice of it Washington will favor next.
How We Think About Election Season at Alpha
We talk through election season with our clients well before it arrives, so this week looks pretty ordinary in our office. That is by design.
For our retired clients, we keep about three years of spending needs in short-term, high-quality bonds. That buffer exists precisely so no one has to sell stocks during a rough patch, whether that rough patch comes from an election, a headline, or something none of us saw coming.
We also keep an eye out for opportunities if things do get choppy. A volatile week can be a good time to rebalance or harvest tax losses. But those are planning decisions, not political ones. And if you are tempted to sit in cash until things "feel" settled, it is worth knowing what holding too much cash can cost you.
Bottom Line
Today is a day to make your voice heard. Vote, talk with your neighbors, and care deeply about the issues that matter to you. Just try not to let those feelings make decisions for your portfolio. History shows that investors who stay invested through every kind of election outcome have been rewarded far more than those who try to time it.
At Alpha Financial Management, we are a fee-only fiduciary firm, which means our only job is to give advice that is in your best interest. From our offices in Savannah, Bluffton, and Alpharetta, we help families across the country build plans that are designed to hold steady no matter who is in office. If election season has you second-guessing anything, we are always happy to talk it through.
Sources: BlackRock, "What history says about 2026 midterm elections and market performance," October 1, 2026, and BlackRock, Student of the Market: Midterm Election Year Special (see full deck for important disclosures). Data via Morningstar and Bloomberg. October 2026 figures via Yahoo Finance. Past performance does not guarantee future results. This content is for educational purposes only and is not a recommendation to buy or sell any security.
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