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Scheeler Financial Group · Market Brief The midterms are in. Your plan doesn’t change. |
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Dear Clients and Friends, Democrats won control of both the House and the Senate in Tuesday’s midterm elections. Starting in January, we will have a Republican White House working with a Democratic Congress. Election results bring a lot of headlines and a lot of opinions. Our job is to help you separate what matters for your money from what doesn’t. Here is what history tells us, drawn from research by our partners at TCW. |
Markets have done well under every combination Average annual S&P 500 return range across every party mix since 1933 |
| Average annual return with a Republican White House and Democratic Congress (22 years) |
| Calendar years since 1980 the S&P 500 finished higher |
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Every combination of White House and Congressional control since 1933 has produced positive average returns for the S&P 500. Over long periods, earnings, interest rates and the health of the economy have mattered far more than which party holds power. The combination we now have, a Republican president with a Democratic Congress, has averaged 8.6% a year. That sits at the low end of the range, and it is still solidly positive. Divided government also tends to mean fewer sweeping policy changes, which removes one source of uncertainty for markets. 
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Pullbacks are normal, election or not Since 1980, the S&P 500 has dropped an average of about 14% at some point during the year. Despite those dips, it still finished the year higher in 35 of 46 years. So if the coming weeks bring a bumpy stretch, that is the ordinary price of owning stocks. It is not a signal that something is broken. 
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■ | Election headlines grab attention in the short term. Over time, markets refocus on earnings, growth, inflation and interest rates. | ■ | History suggests that staying the course through political transitions and normal pullbacks has worked better than reshuffling a portfolio based on who won. | ■ | Your plan was built for markets like this one. No election outcome has historically been a reason to abandon a long-term plan. |
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If the election has you wondering about anything in your own plan, call or email me. That is exactly the kind of conversation we are here for. Rick Rick Scheeler, CFP® · Scheeler Financial Group
rick@scheelergroup.com · (513) 883-6100 Building Wealth That Matters |
Data and charts courtesy of TCW On Markets. Historical S&P 500 returns are shown for illustration only; the S&P 500 is an unmanaged index that cannot be invested in directly. The content in this article is provided for informational purposes only and should not be construed as investment, tax, or legal advice. Please consult qualified professionals regarding your specific situation. Past performance is not indicative of future results. Investing involves risk, including the potential loss of principal. Scheeler Financial Group LLC is a registered investment adviser registered with the SEC (CRD #342671). Registration does not imply a certain level of skill or training. |
