Small Stocks Have Gained at a 42% Yearly Pace in the Six Months After a Midterm, Whoever Won

Three old market patterns line up after Tuesday's vote. The small-cap edge has shown up no matter which party won. It's still an average, not a promise.

By Sean Anees Saifi · Capital Wealth · Published Sunday, November 1, 2026 · Source: The Wall Street Journal Weekend, Saturday/Sunday, October 31 – November 1, 2026, whose market figures are the Friday, October 30 close (Exchange)

Key Points

From the November of a midterm year to the next April, small-caps have gained at a 42% yearly pace, on average, over the past century. That's Leuthold Group's count.
In the six months before that stretch, they lost at a 4% yearly pace. The last midterm year when small-caps failed to gain was about 80 years ago.
The relief has held no matter which party won. Jakab's reason is simple. The waiting is over.
The Russell 2000 closed Friday, Oct. 30 at 2,811.84, down 1.66% on the day but up 1.29% for the week, while the S&P 500 fell 0.57%.
Put a dollar in U.S. small-caps a century ago. It grew to five or six times what a dollar in the S&P 500 did, depending on the index.

42%

Yearly pace of small-cap gains, midterm November to April, averaged over a century

Yearly pace of small-cap losses in the six months before that stretch

2,811.84

Russell 2000 close Friday, Oct. 30, down 1.66% on the day

1.29%

Russell 2000 gain for the week the S&P 500 fell 0.57%

A handwritten cardboard Now Hiring sign taped inside a small shop's front window, a brick wall and blurred city street reflected in the glass.

The Russell 2000 rose 1.29% in the week the Nasdaq fell 2.00%, the small stocks holding up better than the AI names.

In one line: A century of data says the six months after a midterm have been the best stretch for small stocks. It's a pattern to know, not a bet to make.

Spencer Jakab went looking for a pattern in the Journal this weekend. He found three stacked on top of each other. From the November of a midterm year to the next April, small company stocks have gained at a 42% yearly pace, on average, over the past century. That's Leuthold Group's count. The number is annualized, which means a six-month gain stated as a full-year rate. In the six months before that stretch, they lost at a 4% yearly pace. The vote is Tuesday, Nov. 3.

Jakab's three ingredients are the best six months of the year, the midterm itself and the size effect, the long edge small stocks have held over big ones. Each one is a known pattern. Together they've been remarkably steady. The last midterm year when small-caps lost money over that stretch was about 80 years ago. And the relief has come no matter which party won. Jakab puts it plainly. "The main thing seems to be that the uncertainty is over." The six-month pattern itself may go back to farm days. Money was tight at planting and loose at harvest.

Small companies feel it most because they lean harder on easy money. When cash gets scarce, in summer or in nervous stretches, small stocks take the bigger hit. When fresh money comes back, they bounce further. The January effect is strongest for small-caps for the same reason. Put a dollar in U.S. small-caps a century ago, Jakab notes. It grew to five or six times what a dollar in the S&P 500 did, depending on the index.

Where the Russell 2000 sits now

The paper's own tables set the scene. The Russell 2000, the main small-cap index, closed Friday, Oct. 30, at 2,811.84, down 1.66% on the day. For the week it rose 1.29%. The S&P 500 fell 0.57% for the week and the Nasdaq fell 2.00%. The Russell is up 13.3% this year and sits under its 52-week high of 3,068.42. In the week of the AI selloff, the small stocks held up better than the big tech names did.

On the politics, we'll keep to the calendar. Voters pick the House and a third of the Senate on Tuesday, Nov. 3. Jakab's column makes no call on the result, and neither do we. His closing thought is that investors might have reason to feel better by Wednesday, whatever the outcome.

Our read

Investments/Risk, IN04, with a dose of Behavioral. A 42% yearly pace, averaged over a century, is a real number. It's also an average, and averages hide the misses. We read Jakab's column as a case against doing anything rash this week. Election fear is a poor reason to sell. A seasonal chart is a poor reason to borrow and buy. Small-cap funds sit in a few of our model books. The Russell 2000 fund (IWM) is in one book, Vanguard Small-Cap Value (VBR) in two and Avantis Small-Cap Value (AVUV) in one, all held at weight, nothing added. The verdict is watch. The pattern is worth knowing and worth not betting the house on. General planning principles, not advice.

Here's the connection to your own money. Open your 401(k) or IRA and find the small-cap or extended-market fund. Most target-date funds carry one already, so you may own more small companies than you think. Check what share of your stocks it is, and whether you've looked at it since spring. Then write down, before Tuesday night, what you'd do if the market jumps and what you'd do if it drops. You pick the umbrella before the clouds roll in. Bring that note to your next review and we'll stress-test it with you.

What It Means For Your Portfolio

Watch. Know the pattern, don't bet the house on it.

The six months after a midterm have favored small stocks for a century, and that is a reason not to sell in fear, not a reason to pile in.

General planning principles, not advice for anyone in particular. A 42% yearly pace averaged over a century hides big single-year misses. The pattern says nothing about which party wins. Treat it as one more reason to hold your plan through election week.

Check the small-cap slice you already own inside a target-date or extended-market fund before adding more. If you want more small companies, a broad small-cap index fund at a set weight is the plain way to do it.