Midterm Elections and Your Portfolio: Why Your Plan Matters More Than the Ballot
With the midterm elections on November 3, the headlines are getting louder. Control of the House and Senate is up for grabs, campaign ads are everywhere, and it’s natural to wonder whether you should do something with your investments before Election Day.
Our answer is simple: elections matter for the country, but they rarely matter for a well-built, long-term portfolio. History shows that election-season jitters tend to fade once the votes are counted. The decisions that actually move the needle for your financial future are the ones you control, and fall is the perfect time to make them.
What History Says About Midterm Elections and the Stock Market
Midterm years have a reputation for choppy markets, and the data backs that up. Research from U.S. Bank covering 31 midterm elections since 1900 found that stocks averaged a 2.9% return in the 12 months before a midterm, compared with 8.9% across all years.
But the story doesn’t end on Election Day. In the 12 months after a midterm, stocks averaged 12.4%, and 17.5% for elections since 1980. Schwab’s analysis since 1974 found the S&P 500 was higher six months after every one of the last 13 midterms.
Why the pattern? Plante Moran’s look at volatility since 1990 found it tends to build through late summer, peak in October, and fall sharply around Election Day. Markets don’t need a particular party to win. They just need clarity, and uncertainty resolves once the results are in.
A word of caution: these are averages from a small sample, and stocks have not risen after every midterm. Many of the worst midterm years, like 1974 and 2022, were driven by recessions or inflation, not politics. That’s exactly the point: the economy and company earnings drive long-term returns far more than which party holds Congress.
Should You Change Your Investments Before the Election?
For most long-term investors, no. Here’s why we encourage clients to keep politics separate from portfolio decisions:
- Gridlock is common. The president’s party has gained House seats in only three midterms since 1906. Divided government often means fewer sweeping policy changes, which markets tend to tolerate well.
- Forecasting is a double bet. To profit from an election trade, you’d need to predict the winner and how markets will react. Investors who get the first part right often get the second part wrong.
- Timing the market is costly. Moving to cash to “wait it out” means deciding when to get back in. Some of the market’s best days have historically come right after its most stressful stretches.
- The backdrop matters more. In 2026, inflation, interest rates, and Federal Reserve policy are doing more to shape markets than campaign headlines. Those factors don’t change on November 4.
If election news is keeping you up at night, that may be a sign to revisit your risk tolerance with your advisor, not to react to the polls.
What to Focus On Instead: Your Fall Financial Checklist
You can’t control Congress, but you can control these. October is an ideal time to tackle them before year-end deadlines arrive.
- Rebalance your portfolio. Strong markets can quietly push your stock allocation above target. Bringing it back in line keeps your risk where you intended.
- Harvest tax losses. If some positions are below what you paid, selling them can offset gains and up to $3,000 of ordinary income. Watch the wash-sale rule.
- Max out retirement contributions. For 2026, you can defer up to $24,500 into a 401(k), plus $8,000 if you’re 50+ or $11,250 if you’re 60–63. IRA limits are $7,500, plus $1,100 if you’re 50+.
- Take your required minimum distribution. If you’re subject to RMDs, the deadline is December 31. If you’re 70½ or older and charitably inclined, a qualified charitable distribution can satisfy it tax-efficiently.
- Review Medicare coverage. Medicare open enrollment runs October 15 through December 7. Plans and premiums change every year, so it pays to compare.
- Plan your charitable giving. Bunching gifts or using a donor-advised fund can make your generosity go further at tax time.
- Check your emergency fund and cash. Having 3–6 months of expenses in cash is what lets you ride out volatility without selling investments at the wrong time.
The Verde Perspective: Vote Your Values, Invest With Your Plan
At Verde Capital Management, we believe your portfolio should be built around your goals, time horizon, and values, not the news cycle. Elections come and go every two years. A thoughtful, diversified plan is designed to carry you through all of them.
So by all means, vote. Then let your plan do its job. If you’d like to review your portfolio or work through your year-end checklist together, reach out to our team. We’re always happy to talk.
Disclosure: This material is for educational purposes only and is not investment, tax, or legal advice. Past performance does not guarantee future results. Indexes are unmanaged and cannot be invested in directly. Consult your financial, tax, or legal professional regarding your specific situation.
