Today’s chart is by American Funds, splitting out the average midterm election year from all other years. We can see a pattern that reflects a larger truth: the markets both crave certainty and react negatively to uncertainty. The average stays flat before the election, then springs upward after the election. This should *not* be taken as an advertisement for attempting market timing, as the average can hide a host of potential outcomes for any particular election.
Let me use this to present another larger truth: we are not good at predicting. That’s unfortunately true as a species, and especially true about the markets. In case you don’t believe me, I’ll ask you to point me to the person who predicted that the S&P 500 would rise 33% for the year after the last Presidential election. Information like the above is very good at helping us prepare for what the outcomes might look like, so that our behaviors won’t be unduly influenced away from an appropriate, diversified, balanced portfolio built for the long-term. I hope it helps you with whatever outcomes this year brings us.