Stocks Have Done THIS After Every Midterm Election Since 1950

Summary

The video reviews historical U.S. midterm-election patterns and their relationship to the S&P 500. The presenter argues that the president’s party usually loses seats in Congress during midterms, while the stock market has historically performed strongly in the 12 months after Election Day.

Political and historical context

• The video describes the House as narrowly Republican-controlled, 218–214, and the Senate as Republican-controlled, with 53 Republican seats and 47 Democratic-aligned seats, including two independents.
• All 435 House seats and 35 Senate seats—22 Republican and 13 Democratic—are up for election.
• Across the last 20 midterms, the president’s party lost an average of 25.7 House seats and 3.6 Senate seats. It lost House seats in 18 of 20 elections and Senate seats in 13 of 20.
• In the video’s comparison of first- and second-term midterms:
  • House losses averaged 31.6 seats in a president’s first term and 24 seats in a second term.
  • Senate losses averaged 3.1 seats in a first term and 6.7 seats in a second term.
• The presenter cites Trump’s previous midterm as an example: Republicans lost 41 House seats and gained 2 Senate seats. George W. Bush’s party gained 8 House seats and 2 Senate seats.
• The presenter’s historical-pattern-based opinion is that Democrats are more likely to take the House, while the Senate outcome is uncertain. This is not presented as a firm prediction.

Stock-market performance

• The benchmark discussed is the S&P 500.
• Since 1950, the video gives the market’s average annual return as 9.7%.
• It reports an average S&P 500 gain of 15.4% in the 12 months after midterm elections, excluding dividends.
• The presenter cites 1986, when the index gained 1.3% in the 12-month post-midterm period, as an example of a result well below the average.
• The subtitles contain a contradiction: they first say the market was “in the red” in all 19 post-midterm periods, then clarify that it rose in 19 out of 19. The latter matches the presenter’s repeated claim; “in the red” appears to be a subtitle error.
• Using all available U.S. market history, including earlier periods, the presenter says the market rose in 84% of the 12 months following midterms. They prefer the post-1950 data because they question the reliability of statistics from the 1800s.

Explanations offered

The presenter attributes historical post-midterm market strength to:

1. Reduced election uncertainty: Investors may prefer greater predictability once the election outcome is known.
2. Political gridlock or divided government: It may reduce the perceived likelihood of major policy changes.

To explain the midterm effect, the presenter points to lower turnout among the president’s supporters, dissatisfaction with the president, and voters’ preference for divided government and checks and balances.

Methodology, cautions, and disclosures

• The analysis compares historical congressional seat changes and S&P 500 performance during the 12 months after midterms. The main stock-market sample begins in 1950.
• The presenter cautions that historical averages are not guarantees and that returns can vary widely.
• The stock-market figures are stated to exclude dividends.
• No explicit “not financial advice” statement appears in the subtitles. The presenter promotes a financial community that offers investing updates and buy/sell notifications.

Assets and instruments mentioned

• S&P 500 index
• No individual stocks, ETFs, bonds, commodities, or cryptocurrencies are discussed.

Presenter/source: Unnamed presenter from ClearValue Tax.