Heard on the Street · Midterms

Stocks Get the Midterm Blues. History Argues Against Trading the Ballot.

The months before a midterm have been among the roughest for U.S. stocks. What comes after has often been kind, whichever party comes out ahead.

By Sean Anees Saifi · Capital Wealth · Published Tuesday, September 15, 2026 · Source: The Wall Street Journal, September 15, 2026 edition (Heard on the Street)

Key Points

Over the past 40 years, the S&P 500 lost money half the time between early July and a month before midterm Election Day.
The average return in that stretch was negative 2.4%, though stocks have tended to recover in the final four weeks before the vote.
When a midterm ended one-party control, stocks gained 10.4% on average over the next six months since 1970, BlackRock analysts found.
Jakab calls repositioning around the likely winner probably a bad idea: average six-month returns after all midterms since 1970 have been good.
Sean’s September letter notes a pre-vote stock decline in every midterm year since 1950; none of its three conditions for new money has been met.

−2.4%

average return, early July to a month before vote

Half

pre-midterm stretches with a loss, past 40 years

+10.4%

average six-month gain after a midterm ends one-party control

A single cardboard voting booth stands in an empty community hall with a wooden floor, stacked blue chairs and a chalkboard. — The run-up to midterms has historically been one of the roughest stretches for U.S. stocks. The column’s good news: stocks have tended to recover in the last four weeks before the vote.

In one line: Pre-midterm months have been rough for stocks, but history argues against trading on who might win, since post-election returns have often been good.

Investors don’t lack for things to lose sleep over: a war, rising yields, even AI doom talk. Spencer Jakab adds one that shows up on a schedule. The months leading into a midterm, he writes in Heard on the Street, have historically ranked among the roughest for U.S. stocks. Over the past 40 years, the S&P 500 lost money half the time between early July and a month before Election Day.

A rough patch, then relief

The average return over that stretch was negative 2.4%. Then the mood tends to lift. Once the likely outcome comes into focus, stocks have tended to recover in the final four weeks before the vote. After the ballots are counted, the S&P 500 has posted some strong runs.

Divided government often gets the credit, on the theory that business does fine when Washington can’t do much. The numbers partly back that up: when a midterm ended one-party control, stocks gained 10.4% on average over the next six months since 1970, according to BlackRock (BLK) analysts.

Don’t bet the portfolio

Here’s Jakab’s twist: he calls repositioning a portfolio around the likely winner probably a bad idea. Average six-month returns after all midterms since 1970 have been good, even better than the divided-government cases by themselves. Industries in politicians’ crosshairs can do just fine, too. Healthcare returned 14.2% a year during President Obama’s two terms, even though he campaigned on overhauling it.

Energy stocks have flipped the script more than once. Fossil-fuel companies finished last during President Trump’s first term, at negative 16.4% a year, then became the top performers under President Biden despite his climate agenda. They’ve done great so far in the current term, largely because of a Middle East oil supply shock.

Sean’s September letter makes a related point: every midterm year since 1950 has had a stock-market decline before the vote. The letter put this year’s window at Sept. 11 to Nov. 3, with 60/40 odds, and made the case against itself too. Jakab’s bottom line is calmer: whatever the result, the stretch that’s historically been roughest is almost over.

Election-season forecasts change by the hour; your umbrella shouldn’t. If the calendar has you uneasy, bring a recent statement, and fifteen minutes will show whether your stock mix fits your timeline rather than the headlines.

What It Means For Your Portfolio

Hold — don’t trade the ballot

Stay the course through election season: pre-midterm slumps have tended to fade, and the column’s history argues against trading on who might win.

Seasonal patterns are tendencies, not promises: half of those pre-midterm stretches lost money, which means half didn’t. The steadier move is matching your stock mix to your timeline and keeping money you’ll need soon out of stocks. Then neither an election nor a rough autumn forces a decision. General planning principles, not advice for anyone in particular.

The Capital Wealth portfolios stay neutral on stocks and buy nothing new before Wednesday’s Fed decision. Energy holdings stay: Exxon Mobil (XOM), Chevron (CVX), Cheniere Energy (LNG), Valero Energy (VLO). New money waits on the letter’s three conditions: a core-inflation print of 0.1% or less, a Fed that holds and the VVIX back under 90. That’s vol-of-vol — how jumpy volatility is. None has been met.

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