Related: 3 ETFs to Capture Post-Midterm Election Gain
History Looking to Repeat Itself
If history repeats itself, according to Stephen McBride of the RiskHedge Report, it could bode well for stocks and in turn, three exchange-traded funds (ETFs). As McBride noted in a MarketWatch article, stock movements into the green are a perfect 18-for-18 following midterm elections–the type of sure-shot accuracy that could rival even basketball star Stephen Curry from the three-point line.
“Since 1946, there have been 18 midterm elections. Stocks were higher 12 months after every single one. Every single one,” McBride wrote. “That’s 18 for 18. Even though we’ve had every possible political combination in the past 72 years. Republican president with Democratic Congress. Democratic president with Republican Congress. Republican president and Congress. Democratic president and Congress.”
It’s not just accuracy, but also the extent of the rise as McBride noted that following midterm elections, stocks have gone up by an average of 17% and even higher from their lows–32%. McBride also alluded to the latest October sell-off as standard fare when reacting as a precursor to midterm elections.
“There’s one last important point you should know,” wrote McBride. “Leading up to midterms, U.S. stocks typically perform poorly. From January to October in midterm years, they drop an average of roughly 1%. In all other years, stocks rise roughly 7% in that time frame.”
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