By the time this prints, the midterm elections will be just a few short days away. You may have your mind made up on your vote, you may still be researching, or you may have decided not to vote at all. The world is full of opinions on whichever category you fall into so I find it best to research on my own, cast my vote, (don’t forget to get my sticker!), then move on with my day regardless of the outcome. Personally, I will research and vote, but I actually don’t like to get involved in politics very deeply. Growing up, we were taught not to talk about religion, politics, or money… It rarely ends well so I certainly won’t be spewing any religious opinions in this article but my job as an advisor does require that I know a little bit about money, politics, and their relationship to each other.
The market has historically reacted with volatility more in the weeks and months leading up to midterm elections than it does after the actual votes are counted. The uncertainty of who will take positions and their subsequent policies creates a sentiment that typically has choppy to flat to sometimes even negative returns. This can be anywhere from 6-12 months before elections and worsen as the uncertainty peaks. Lucky for us, most of that time is already behind us.
Then the midterms come and go… In a study conducted by U.S. Bank, from 1900-2025, in the 12 months following midterm elections, markets gained on average 12.4% positive returns regardless of party control. The calendar year following the midterm election is also typically the 3rd year of a presidential cycle and, in a shorter period of study from New York University, the S&P 500 averaged 20% in all 20 instances of third-year periods studied from 1947-2023. The third year gain was just over 9% higher than the average gain of all other years in the same period.
This is where the tagline we all know and love gets inserted: “Past performance does not indicate or guarantee future results.” And I hope that what I write is never taken as some sort of crystal ball or blanket advice. True custom advice comes from many conversations and meetings to uncover what is important to you so we can build a plan meant to help you achieve your ambitions. But I digress…
The long and the short of it is simply a reminder that politics stir up emotions and emotions should never drive your financial decisions. As an advisor, I have often found myself in more therapeutic conversations than financial conversations, depending on the mainstream media that each client listens to. Having a financial advisor might mean picking investments that outperform your own abilities, it might mean having a person to call rather than a 1-800 number, or it might mean that when the rest of the world is throwing static and speculation at you, you have a trusted confidant to remind you that a knowledgeable advisor factors volatility into your personal financial plan and everything will be OK!
So, do your research, cast your vote, (or don’t), then get on with whatever it is that fulfills you and the people in your life. This is one period in time just like the last election was, and the one before that, and the one before that. We hope all elections and subsequent leaders act to bring prosperity to the American people so we may continue to enjoy our freedoms and our ability to make the most of our own situations. Lastly, I know I said I wouldn’t get religious, but I lied just a little: We all know someone spending time in a combine or grain cart or a semi or running meals to keep them rolling… Don’t forget to pray for a safe and fruitful harvest season for all! Happy Fall!
Ashlea (Kleitsch) Jones
Financial Advisor
Prime Capital Financial
Cedar Rapids, Iowa
primefinancialcedarrapids.com
(319) 269-7143
This information does not constitute legal advice. Prime Capital Financial and its associates do not provide legal advice. Individuals should consult with an attorney regarding the applicability of this information for their situations.
Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite#150, Overland Park, KS 66211. PCIA doing business as Prime Capital Financial | Wealth | Retirement | Wellness.
Ashlea Jones