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What Does the Mid-Term Election Mean for My Investments?

What Does the Mid-Term Election Mean for My Investments?

August 01, 2022

Navigating Financial Decisions Amidst Political Turmoil

Generally, I believe that politics in general and elections in specific don’t have a lot to do with your real, long-term, financial goals. The data shows that over the course of 20 to 40 years, politics wash out. And for most of us, we should be focused on our financial goals over the next 20 to 40 years. So, I don’t suppose that the mid-terms should have a huge impact on investment plans.

Potential Impact of Mid-Term Elections on Financial Markets

But, if you’ve been listening to political pundits, you are likely to hear more and more talk about the mid-terms. They will be here in a few weeks. And, they are the next topic on the talking-head menu.

What most of the “experts” say is that Republicans appear likely to win one or both houses of Congress.

Here’s why:

  • History shows that Mid-Term elections are hard for the party in power. Going back to 1922, the party of the sitting president has lost, on average, 30 seats in the House and four in the Senate in midterms.
  • President Biden’s approval rating has fallen from 56% at the start of his term to below 40% in May, the lowest of his presidency. This is important because presidential approval ratings are often seen as referendums on down-ballot candidates in the president’s party.
    • Economic uncertainty may influence how people vote. Voters often blame the party in power for current economic conditions.
    • With inflation at the highest levels in 40 years, many people are not happy with the current administration.

Regardless of which party controls the House and the Senate, it’s likely that we will continue to have a divided government, where it’s hard to get anything done.

In general, the markets don’t like mid-term election years. History shows how the S&P 500 behaves before and after Mid-Term elections:

  • Before the Mid-Term Election - The average annual return of the S&P 500 Index in the 12 months before midterm elections is 0.3%, versus the historical average of 8.1% in non-midterm years.
  • After the Mid-Term elections – The S&P 500 has an average return of 16.3% during the 12 months following.

Mid term year election stock market performance

Considerations for Seeking Financial Advice Amidst Political Uncertainty

With investment markets down about 20% from their peak as I write this, and with inflation at 40-year highs, you can’t be blamed if you are less than thrilled right now with how the government is handling the economy. But, it’s interesting to note that even without the bad news we are dealing with today, you may have other reasons to be unhappy about the economy.

Research data shows that the way people feel about the economy is a reflection of whether their political party is in control. Generally, when the party that you prefer has control of the White House and either the House of Representatives or the Senate, you feel pretty good about the economy in general. If the “other party” is in control, you generally don’t feel good about the economy.

National economic condition rating

If the coming election has you concerned about reaching your financial goals, maybe we should talk. I am a fiduciary advisor who is always an advocate for my clients, so I’m honored to help you sort things out. Follow this LINK to find a time for us to visit.

If you would like to find another great advisor to help you, a great place to start is to talk with a couple of CERTIFIED FINANCIAL PLANNER™ professionals.

To find a CFP® professional near you, start your search here.

As you visit with financial planners, I suggest a couple of things to check:

  • Is the advisor always the client’s advocate – a fiduciary advisor?
  • Is the advisor paid by clients, not financial product manufacturer or distribution network? That would be a fee-only advisor.

These two points help assure that you are working with a professional who is committed to your best interest at all times. It seems sort of obvious to me that a professional would work in this way, but it’s not automatic.

A fiduciary, fee-first, CFP® professional can help you make great retirement income choices and develop a comprehensive financial plan that is driven by your goals and priorities and addresses all aspects of your financial life. With a big-picture approach, you will be better prepared to understand your options at every step along the way. 

Yes, I am a CFP® professional. I’m always a fiduciary and I work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice.

If this article has you thinking about your own circumstances, contact my office at I am always happy to meet with people who are working on their retirement plans. Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.