Midterm elections will be held in the U.S. on November 8, 2022. The results will determine the balance of political power in Congress for the next two years and could potentially impact issues such as taxes, government spending, trade policy and a number of sociopolitical issues. The stakes feel high…so it’s no surprise that many investors are anxious about the outcome.
However, as it turns out the outcome of elections and the impact on investment results are not as closely linked as many assume. Markets are more dependent on corporate earnings, the economic outlook and investor sentiment than on election outcomes. As a result, we do not advocate making investment decisions based on political preferences or guesses about the political future.
Generally speaking, incumbent parties tend to lose seats in Congress during mid-term elections. This has happened well over half of the time since 1934. Interestingly, markets have generally been unfazed by changes in the dominant political party. Investors don’t like uncertainty and once market participants know what the rules are and who will be in power, they look to maximize their returns with the government they have; not the one they wished they had.
We believe investors are best served by staying focused on long term objectives and executing on a disciplined, long term strategy. Try not to allow distractions or short-term noise to take you off course. We encourage you to vote…with your ballot, not with your investments.
Let us know if we can do anything for you.
Matt and Andrew