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Volatility has been a defining feature of midterm years, with significant drawdowns that tend to emerge as the year progresses. Over the past 10 midterm election cycles, stocks have experienced average drawdowns of 16.77%, but one-year gains following those lows have averaged 27.80%.

 

 
Year Max
Drawdown (%)		 Drawdown
Low Date		 Returns (%)
1 Year Later
1986 -9.42 9/29/86 39.92
1990 -19.92 10/11/90 29.10
1994 -8.94 4/4/94 15.11
1998 -19.34 8/31/98 37.93
2002 -33.75 10/9/02 33.73
2006 -7.70 6/13/06 23.86
2010 -15.99 7/2/10 31.01
2014 -7.40 10/15/14 8.66
2018 -19.78 12/24/18 37.10
2022 -25.43 10/12/22 21.60
Average -16.77 September 2 27.80

Chart Data: 1986-2022. Past performance does not guarantee future results. Indices are unmanaged and not available for direct investment. S&P 500 Price Index is a market capitalization-weighted price index composed of 500 widely held common stocks and does not include the reinvestment of dividend payments. For illustrative purposes only. Data Sources: Morningstar, 6/26.

Infographic: Stocks have averaged a 31.98% gain one year after midterm lows

A financial professional can help you build a portfolio that’s right for you despite political uncertainty.

 

Important Risks: Investing involves risk, including the possible loss of principal. 

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