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19 for 19. Since 1950, the S&P 500 has been higher one year after every single US midterm election. The average gain, about 15%. With the vote on Tuesday, November 3rd, that stat is all over X. And Ken Fisher, founder of Fisher Investments, has a name for it. The period [snorts] of the fourth quarter of the second year of a president's term when we have midterms
ushers in a 9-month period. That and the two subsequent quarters, that's the most positive period in all of stock market history. But 2026 has a twist. A Fed that just started hiking and inflation rising into the vote. So, is the miracle safe this time? Receipts only. First, does it hold up? Yes. 19 midterms, 19 gains.
The best, plus 33% after 1954. The weakest, plus 1% after 1986. A window that included the crash of October 1987. And it beats the other years of the cycle. Same 12 months in presidential election years, about 8 and 1/2%. The year after a presidential vote, about three. Midterm years, 15. For context, about three in four random 12-month stretches since 1950 were positive anyway.
Stocks usually rise. But 19 in a row is still unusual. Why would a vote move stocks? Fisher's answer, gridlock. Presidents push their biggest, most divisive bills early. Their party usually loses ground in the midterms, so big new laws get harder, and that fear fades. And he says it works no matter who wins.
Whether the Democrats take the house and not the Senate, the House, and the Senate, or neither, you're still going to have the gridlock effect. His favorite number. But the fourth quarter of a midterm year has been positive 88% of the time over the midterms of the last 100 years. Our check back to 1942, midterm fourth quarters rose 18 times out of 21.
His full 9-month window, October to June, 21 out of 21, up about 20% on average. Now the twist, on September 16th, the Fed raised rates for the first time since July 2023 to a range of 3.75 to 4%. 1994, 2018, and 2022 were also midterms with Fed hikes, and stocks still rose after all three. But by election day, those hikes already added up to 1 and 3/4 points or more.
This time, just a quarter. Inflation is rising, too. 3.7% in September, up from 3.4 in August. In 2022, inflation was higher, but it had already peaked by the vote. And the seven biggest tech stocks are now about 35% of the index. Morgan Stanley's chief investment officer, Mike Wilson, on Bloomberg on October 13th, says the pullback may not be over.
The question we don't know the answer to yet is, do we need a final kind of catch down in the S&P 500 to kind of finish this correction? And I would say it's sort of 50/50, but that would that would be something we would really embrace, because we don't see any issues with growth. And remember 2018, another midterm year with Fed hikes.
The S&P fell 14% in the fourth quarter. The streak survived only because stocks bounced back the next year. Two pieces of fine print. One, start dates matter. Some polls say November to June was up after every midterm since 1942. Not in 1946, it slipped about 1%. Start on September 30th instead and it's up.
Pick the date, pick the record. Two, 19 is a small sample. Wilson's point is simpler. The vote itself clears the air. And then the markets tend [snorts] to, you know, get the most anxious before the result. So, I actually view the midterm elections, no matter who wins or how what the outcome is, as a clearing event so the market can kind of look forward.
Scoreboard. For the miracle, 19 for 19, a perfect 9-month record since 1942 and gridlock whoever wins. Against it, a Fed that just started hiking, rising inflation, and a top-heavy market. Fisher's bottom line. It tends to be the most consistently positive period in American stock market history and there's no reason to believe that it's particularly different this time.
My take. The pattern is real, but it's a tailwind, not a guarantee. Even in 2018, the streak held and you still sat through a 14% drop first. Watch three dates. The Fed decision on Wednesday, October 28th, the vote on Tuesday, November 3rd, and October inflation data on November 10th. Subscribe for receipts, not hype. Do you trust the midterm miracle? Tell me below. Not financial advice.
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