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Many investors trying to figure out what stocks do after midterm elections have focused on whether the Republicans will take enough seats in the Senate to gain the majority.
The Republicans are heavily favored to take the Senate. But it won't make much difference.
You see, when it comes to what stocks do after midterm elections, it's best to look beyond what might happen this week or next and instead take a long-term view.
History gives us a lot of reasons for optimism.
First of all, the November-April period is the best season for the market, midterms or no midterms. On average, the Standard & Poor's 500 index has risen 7.1% in this period.
But midterms have been a turbocharger, more than doubling the average return to 15.3%. And that midterm boost has been remarkably consistent, occurring 94% of the time.
The real surprise, though, is the impact of a midterm election one year out.
"If you wait 12 months, meaning October to October in that third year [of a presidency], the market has risen 17 of 17 times since World War II, gaining an average of 17.5%," S&P Capital IQ's Sam Stovall told Yahoo! Finance.
That's not as odd as it might seem.
"Stocks have rallied post-election regardless of the political outcome… suggesting that the elimination of uncertainty and an end to the political rhetoric is constructive for the markets," Carmine Grigoli, chief investment strategist at Mizuho Securities USA, told USA Today.
And while the stock markets will do well no matter who wins, a Republican win does add a bit more spice to the mix.
Since 1945 the combination of a Democratic president with a unified Republican Congress has yielded better stock returns – 15.1% – than any other variant.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.