Since 1946 we have had 18 midterm elections. Though that number is not a large sample group and you cannot rely on it statistically, 12 months after each of the 18 elections the stock market has been higher. Therefore, from a stock market point of view, it does not matter who wins or loses, which party gains power and what the Congress make-up looks like between Democrats and Republicans. Also, since 1946 the average gain in the year after the midterm election is 17%.
Another enduring statistic is that the third year of a first term president is historically the strongest for stocks. The average return is a little less than 14% whereas the other years it is around 5%.
One more interesting point is that the time period of January to October of midterm election years the stock market falls on average about 1%. We have had a 7% fall in the S&P500 this year in that time period.
Of course these numbers do not prove we will have a strong 12 month period after the election but it is nice to have the odds on the investor’s side.
*Numbers taken from a recent article on Marketwatch.com written by Stephen McBride