Midterm Elections Won’t Wreck Your Portfolio

With the November midterms just months away, campaign coverage is intensifying. Here’s what history actually shows about elections and your portfolio.

Election coverage tends to dominate headlines for months before voters head to the polls, and the 2026 midterm elections are no exception. As citizens, these elections matter enormously. As investors, though, midterm elections have historically mattered far less to long-term portfolio performance than most people assume. Here’s why.

What’s at Stake in the Midterm Elections

Midterm elections happen every four years and determine the composition of Congress, which shapes the government’s ability to pass legislation. Current polling suggests a divided government remains the most likely outcome this cycle, though margins are thin in both chambers.

In the House, 218 seats are needed for a majority. Republicans currently hold 219, meaning Democrats could take control by winning just a handful of races. Republicans hold a firmer 53-seat majority in the Senate, though expectations have shifted in recent months. A great deal can still change between now and November.

The composition of Congress genuinely matters for policy on taxes, entitlement programs like Social Security, defense spending, and the national debt. This fall’s outcome could also shape the administration’s agenda on tax provisions, tariffs, and the ongoing conflict in Iran. None of that is in question. What’s less clear is whether any of it should change how you invest.

Do Midterm Elections Actually Move the Stock Market?

It’s worth separating your preferences as a voter from what’s actually best for your portfolio. A midterm election mattering for the country doesn’t mean it matters equally for financial markets, or that it should drive changes to your financial plan.

It seems intuitive that election years would bring more volatility, or that certain outcomes would be better or worse for investors. Since elections affect economic policy, and economic policy affects industries and companies, it’s easy to assume markets would react accordingly.

History tells a different story. Looking back since the Great Depression, stock market returns have been positive across presidential election years, midterm election years, and non-election years alike. Markets have performed well and the economy has grown under Republican majorities, Democratic majorities, and divided governments. Fidelity’s own research on midterm elections and markets reaches a similar conclusion: the pattern isn’t tied to which party wins or loses.

That doesn’t mean every year is positive. In the last midterm cycle in 2022, post-pandemic inflation weighed on markets. In 2018, concerns about global growth and Federal Reserve policy drove market swings. In both cases, the underlying economic environment drove returns, not the midterm election itself.

It’s also worth noting that presidents who begin a term with a Congressional majority often lose it during the following midterms. That happened to Presidents Biden, Obama, George W. Bush, and Clinton, among others, in recent decades. Markets and the economy continued growing through each of those transitions.

Why Broader Economic Trends Matter More Than Midterm Elections

For long-term investors, the business cycle and interest rates have historically driven portfolio performance far more than the makeup of Congress or the White House. Political change tends to happen gradually and with significant lags. Even substantial policy shifts, like recent changes to taxes and tariffs, often have direct economic effects that are smaller and slower to show up than headlines suggest.

That’s because corporate earnings, inflation, employment, and economic growth are shaped by forces that extend well beyond Washington. The 1990s technology boom, the mid-2000s housing cycle, the post-pandemic inflationary surge, and today’s artificial intelligence developments have all moved markets in ways that had little to do with which party held power.

This year’s election is unfolding against a backdrop of geopolitical conflict, elevated interest rates, and ongoing uncertainty around AI. Those factors have been far larger drivers of markets and corporate earnings than any single Congressional race, and major stock indices have still delivered strong returns this year despite periods of uncertainty.

None of this means markets never experience volatility around elections. It means the long-term trajectory of markets has been driven primarily by economic fundamentals, innovation, and corporate profitability, not by which party controls the House or Senate. That’s also why reacting to short-term political headlines by trying to time your portfolio rarely pays off, and why staying diversified across sectors and asset classes matters more than betting on any single political outcome.

The Bottom Line on Midterm Elections and Your Portfolio

We’ll be watching the midterm elections with interest, and while the outcome is unlikely to materially impact most financial plans, we’ll let you know if anything changes that assessment. If you have questions about the election or what it might mean for your specific situation, reach out. We’re always happy to talk through how your financial plan is designed to navigate these moments.

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Frequently Asked Questions

Do midterm elections affect the stock market? Historically, no, not in a way that has meaningfully changed long-term returns. Stock market returns have been positive across presidential election years, midterm election years, and non-election years alike since the Great Depression, regardless of which party held Congress or the White House.

Should I change my portfolio before the midterm elections? Generally, no. Business cycle conditions and interest rates have historically driven portfolio performance far more than the composition of Congress. Making changes based on election predictions is a form of market timing, which has a poor long-term track record.

What happens to markets when a president loses their Congressional majority? Markets and the economy have continued growing through these transitions historically. Presidents Biden, Obama, George W. Bush, and Clinton all lost their initial Congressional majority during a midterm election, and markets kept functioning normally in each case.

What actually drives long-term stock market returns? Corporate earnings, inflation, employment, interest rates, and broader economic and technological trends have historically mattered far more than which party controls Congress or the White House.

As always, CAM Investor Solutions is here to help.

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Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your account holdings correspond directly to any comparative indices or categories. Need to add more disclosures.

About CAM Investor Solutions

CAM Investor Solutions, a fee-only independent Registered Investment Advisor, has offices located in Colorado, Florida, and Texas. As a growing wealth management firm, we focus on the needs of our clients to improve their quality of life. Our firm’s commitment to innovation through rigorous academic research enhances how we serve a multi-generational audience.

CAM’s Specialties Include:

• Managing concentrated wealth
• Planning for stock and option compensation / company IPOs 
• Advanced tax managed investment strategies
• Custom retirement income strategies
• Cash management

Contact:
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info@caminvestor.com
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CAM Disclosure

SOURCE: Clearnomics, Bloomberg.

M & A Consulting Group, LLC, doing business as CAM Investor Solutions is an SEC registered investment adviser. As a fee-only firm, we do not receive commissions nor sell any insurance products. We provide financial planning and investment information that we believe to be useful and accurate. However, there cannot be any guarantees. 

This blog has been provided solely for informational purposes and does not represent investment advice. Nor does it provide an opinion regarding fairness of any transaction. It does not constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy.

Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. Tax planning and investment illustrations are provided for educational purposes and should not be considered tax advice or recommendations. Investors should seek additional advice from their financial advisor or tax professional.