Election Day could mean big things for your 401(k). Here’s what history tells us
Whether or not Tuesday’s midterm elections deliver a so-called blue wave, one thing is for certain: More volatility will likely ripple through financial markets. Midterm years have been historically weak for the U.S. stock market , delivering annual gains of just 7.5% versus an average return of 12.4% during non-midterm years, according to figures compiled by BlackRock . And even though more…
On Election Day, a potential "blue wave" could have significant implications for your 401(k) portfolio. Midterm years have historically been weak for the U.S. stock market, with annual gains of just 7.5%, compared to an average return of 12.4% during non-midterm years. Despite nearly $12 billion being pumped into this year's midterm campaign, investors haven't positioned themselves for a Democratic majority in Congress.
In fact, a survey of over 100 institutional investors found that they don't have a specific position based on polling data. Experts warn that the stock market hasn't fully priced in a blue wave, as it could lead to increased partisanship in Washington, D.C. Long-term investors should ignore the election results and stay invested, as letting politics guide investment decisions has come at a significant cost in recent years.
Should a Democratic sweep occur, the S&P 500 may see a rise of up to 1.25%, while other outcomes could lead to stock market gains of 14.1% in the six months following the election. Investors should watch key governor's races, particularly in Texas, as a Republican gubernatorial victory could spook the market in the short term. Regardless of the outcome, markets are likely to adjust and recover quickly.
Written by urgent.news from Fast Company's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
