The S&P 500 was up a year after each of the 19 midterm elections since 1950.
In 14 of the 19 cycles, the index gained during the two weeks ahead of the vote.
Buyers who got in two weeks early were still up a year after the vote every time.
Since 1950, there've been 19 midterm elections in the U.S. And a year after each of them, the S&P 500 (SNPINDEX:^GSPC) was higher than it was on Election Day.
This year's vote falls on Tuesday, Nov. 3 -- two weeks from today. The timing may feel awkward for anyone holding cash meant for a fund that tracks the index. As of this writing, the S&P 500 stands around 2% under its record close of 7,818.93 on Oct. 6, after dropping around 2% last week in its worst week since June.
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
It's tempting to wait and see how the vote turns out before buying. I don't think waiting is worth it, and the two weeks before past midterms help show why.
Image source: Getty Images.
Measured from the last close on or before each Election Day to the same date one year later, the index climbed around 15% on average over those 19 cycles, by my count (on price alone, not counting dividends). BNY's research team, with its own approach, put the average at 16.6% in a study released in May.
Even the worst years still ended higher. The 12 months after the 1986 vote saw the Black Monday crash in October 1987, and the index still closed around 1% over its Election Day level. The year after the 2010 vote ended up about 4%. And after the last midterm, in 2022, the rise was around 14%.
Sure, 19 cycles is a small sample. And a year after a vote is shaped by a lot more than the vote itself, from interest rates and recessions to company profits.
Not much. Today is exactly two weeks before Election Day, so the fair comparison is how the index did over the same two weeks before every past midterm.
Using the same closes, the S&P 500 rose during those two weeks in 14 of the 19 midterm cycles since 1950, gaining around 1.4% on average. The best run was in 1962, when the index climbed around 9% in the two weeks before the vote. The worst came in 1950 and 1978, when it lost almost 4% each time. And in the other three years with a decline (1954, 1990, and 2022), the dip was under 1%.
The middle result for all 19 cycles was a gain of less than 1%. In a typical midterm year, then, the price gap between buying two weeks early and buying on Election Day was small either way.
In other words, waiting for the result usually meant paying a little more, not a little less. And when waiting did save money, it never saved more than around 4%.
Showing how little the two-week timing mattered, an investor who bought two weeks before every midterm and held until a year after the vote came out ahead in all 19 cycles. That buyer's average gain was around 17%, versus about 15% for someone who waited until Election Day and held to the same end date.
The gap of a little under 2 percentage points comes only from the two weeks before the vote. But both buyers did well, and most of each one's gain came in the 12 months after the vote.
Waiting may look more tempting than normal this year. The index just had its worst week since June, and someone could hope to buy at a lower valuation if the selling lasts into Election Day.
It might. But I think that hope is a bet against a pattern that has held in most midterm years. And even after last week's fall, the S&P 500 is still up around 12% in 2026 as of this writing.
More broadly, staying in cash to dodge a bumpy stretch can get costly when the bounce comes before someone buys back in.
In the end, I wouldn't hold back cash for the midterms. Since 1950, the year after the vote has arguably mattered much more than the price paid in the two weeks before it, and waiting has more often lifted that price than lowered it.
This might be the year the streak ends, so an index fund works best as a buy-and-hold investment, with money that can ride out a rough year. For money like that, though, I don't see much reason to wait another two weeks for the vote.
Most investors think they missed the AI boat because they didn't buy Nvidia in 2005.
But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout, a massive technology build-out that Google’s CEO says could be more profound than fire or electricity.
While everyone watches the chip designers, one "backbone" company provides the critical technology that Nvidia and AMD literally cannot function without. We’ve detailed this under-the-radar player in our new AI Playbook.
Continue »
Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.