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Recent market volatility may raise some questions about the uncertainty in Washington, D.C. However, increased volatility leading up to midterm elections has typically been followed by better returns.


As we approach the midterm congressional elections, some have questioned whether the recent surge in volatility is a precursor of what is to come.

Since 1966, increased volatility and muted returns have characterized the months leading up to the election. However, the S&P 500 actually tends to see above-average performance in midterm years starting in mid-October and continuing into the following year. As illustrated in the chart above, returns in the months following the election have typically exceeded non-midterm years by a wide margin. This suggests that the specific outcome is less critical than the clarity that the end of the election cycle can provide.

While the recent volatility can seem quite impactful on a portfolio, this is not unusual at this point in the election cycle. Of course every year is different, but history suggests that pre-election volatility is typically followed by better results and the potential for stronger returns may lie ahead. Staying invested and sticking to a long-term investment strategy is the best way to navigate through these periods of short-term volatility.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all of the information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment. There may be instances when consultant opinions regarding any fundamental or quantitative analysis may not agree.

Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.