No matter what your political disposition, you may be a little nervous about today's elections, but you shouldn't be nervous about how it will affect the markets. Since 1946, there have been 18 midterm elections. Stocks were higher 12 months after every single one.
Since 1946, stocks have risen an average of 17 percent in the year after a midterm. If you measure from the yearly midterm lows, the results are even better. From their lows, stocks jumped an average of 32 percent over the next 12 months. That’s more than double the average performance for stocks in all years.
One more political note: The second year of the presidential cycle, which is the year we're in right now, is typically the worst for stocks. The performance of stocks in the third year of a presidential term beats all other years by a long shot, returning an average of nearly 14 percent between 1928 and 2016.
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