Navigating Your Financial Plan During Midterm Election | Clayton Taylor
Staying the Course: Navigating Your Financial Plan During Midterm Election Years Like 2026
By Clayton Taylor, Financial Advisor - Platinum Wealth Solutions of Texas
As we move through 2026 here in San Antonio, many clients are asking the same question: How might the upcoming midterm elections on November 3 affect my investments and overall financial plan? With headlines ramping up about congressional control, policy shifts, and potential economic changes, it's natural to feel a bit uneasy.
The good news? History shows that midterm election years often bring short-term volatility and muted returns, but they rarely derail long-term progress. Markets have weathered every election cycle since the 1930s, and the data consistently points to one timeless principle: staying the course with a well-diversified, goals-based plan outperforms trying to time political events.
Let's look at the patterns and what they mean for you.
Historical Performance in Midterm Election Years
Analyses of the S&P 500 going back decades (from sources like Capital Group, U.S. Bank, and First Trust Advisors) reveal a clear pattern in midterm years:
Pre-election weakness and volatility:
In the 12 months leading up to midterms, average returns have been lower around 2.9% compared to the long-term historical average of about 8.9%. Intra-year drawdowns (temporary declines) average around 16–18%, meaning markets often dip significantly at some point before November. This stems from uncertainty. Investors dislike not knowing policy outcomes on taxes, spending, regulation, or trade.
Post-election recovery:
Once results are in and uncertainty fades, markets typically rebound strongly. The average 12-month return following midterms has been 12–15% (or higher in some studies since 1950), often nearly double the norm for other periods. In many cases, the S&P 500 has posted positive returns in the year after every midterm since the mid-20th century.
Midterm years tend to be the "weakest" in the four-year presidential cycle due to higher volatility, but the market has still delivered positive full-year returns in most cases. Fundamentals—corporate earnings, interest rates, inflation trends, and economic growth—ultimately drive performance far more than which party controls Congress.
Why Staying the Course Matters
Election-year noise can tempt even seasoned investors to make reactive changes: selling during dips, shifting to cash, or chasing "safe" sectors based on predicted outcomes. But these moves often backfire. Studies show that trying to time the market around elections underperforms a disciplined, long-term approach. Markets dislike uncertainty, but they reward patience—volatility creates buying opportunities for those who stay invested.
In San Antonio's resilient economy with steady growth in healthcare, military, and manufacturing, your plan is built on more than headlines. Diversification across asset classes, regular rebalancing, and alignment with your personal goals (retirement, education funding, legacy building) provide the buffer needed to weather short-term storms.
Practical Steps for 2026
Here are actionable ways to reinforce your plan this year:
- Review, don't overhaul: Double-check that your portfolio matches your risk tolerance, time horizon, and objectives. If it was solid at the start of the year, minor tweaks (like rebalancing) are usually enough—no need for major shifts based on polls or predictions.
- Focus on what you control: Build or maintain an emergency fund covering 6–12 months of expenses. Keep debt manageable, especially variable-rate loans. Automate contributions to retirement accounts to buy during dips (dollar-cost averaging).
- Tune out the noise: Limit exposure to sensational headlines. Markets have risen through wars, recessions, pandemics, and countless elections—because the U.S. economy adapts and innovates.
- Prepare for opportunities: If volatility creates attractive entry points (e.g., undervalued stocks or bonds), a balanced plan positions you to benefit without guessing timing.
At Platinum Wealth Solutions of Texas, we help clients cut through election-year distractions by keeping the focus on fundamentals and personalized strategies. Whether you're in accumulation mode, nearing retirement, or preserving wealth, our approach emphasizes discipline over reaction.
The 2026 midterms will come and go, but your financial goals are long-term. History favors those who stay invested and stick to the plan.
If you'd like a no-obligation review of your portfolio in light of current conditions or just want to discuss how your strategy holds up reach out. I'm here to help you navigate 2026 with confidence.
Best regards,
Clayton Taylor, Financial Advisor - Platinum Wealth Solutions of Texas