We’ve got a quick post about markets and elections for you.
First, a quick win: markets recently posted a strong rally on better-than-expected inflation data.1
We’re highlighting this win because it reinforces a fundamental lesson about long-term investing: you want to be in the market when it moves. Not on the sidelines. If you’re on the sidelines, you miss out.
Ok, lesson over.
Let’s talk about the midterm election and how it could impact markets.
Regardless of our personal feelings about election results, history tells us that markets generally prefer a divided government.2
Why? Markets like certainty.
And splitting governance between both parties typically means fewer sweeping policy changes that could introduce uncertainty.
You can see in the chart below how markets have performed (on average) depending on which party controlled Congress when a Democrat was in the White House.
Does this mean we can count on a rally?
No. Mainly because markets are driven much more by fundamentals and economics than politics.
And, political gridlock is not always good. Brinksmanship over issues such as debt ceilings, federal budgets, and government shutdowns could cause instability and market volatility.
It’s easy to let the whirlwind of headlines and uncertainty draw us into short-term thinking and worry about the future.
But what if we consciously paused and asked a deeper question?
What are you grateful for right now?
We ask because gratitude pulls us away from the daily stressors and irritants to remind us of what truly matters.
We are deeply, abundantly grateful.
For our health.
For the food in our fridge.
For the roof over our heads.
For our circle of family and friends.
For our communities that have given us a home.
For our amazing clients and partners who have given us a vocation.
May you and your loved ones enjoy a wonderful Thanksgiving full of joy and memories.
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.
The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. Indices are unmanaged and cannot be invested into directly.
Advisory services offered through Wilon Wealth Management, a Registered Investment Adviser Firm.
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