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While not official yet, a politically divided federal government appears likely for the next two years. With the mid-term elections effectively behind us, investors will focus again on the same pre-election worries: inflation, interest rates, corporate earnings, and a possible recession.
Nevertheless, simply getting past the election could be a positive. Since 1950, the S&P 500 has delivered positive results — usually double-digits — 100% of the time during the 12 months following the election, regardless of which party controlled Congress or occupied the White House.
The world is facing some unique and challenging disruptions, so is this time different? Only time will tell, but here's a short trip down memory lane of mid-terms past. :
- 1958 - the Great Chinese Famine begins, killing more than 30 million people (S&P 500: +17% 12 months after mid-term elections)
- 1962 - the Cuban Missle Crisis has the world on edge (+32% after mid-terms)
- 1970 - in the midst of the Vietnam War and still recovering from the 1968 global flu pandemic (+21% after mid-terms)
- 1982 - US/Russian nuclear negotiations while Russia imposes martial law in Poland (+44% after mid-terms)
- 1990 - Soviet Union collapses, East and West Germany are united (+33% after mid-terms)
- 2002 - The European Union officially adopts a new global currency, the Euro (+21% after mid-terms)
- 2010 - the ongoing global financial crisis and historic unemployment (+8% after mid-terms)
Ignore the Noise and Think Long Term
by Victor Zhang
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