I've got a quick note about markets and elections for you, plus some big-picture questions about gratitude at the end.
First, a quick win: markets recently posted a strong rally on better-than-expected inflation data.1
I'm highlighting this win because it reinforces a fundamental lesson about long-term investing: you want to be in the market when it moves. Not on the sidelines. If you're on the sidelines, you miss out.
Ok, lesson over.
Let's talk about the midterm election and how it could impact markets.
Regardless of our personal feelings about election results, history tells us that markets generally prefer a divided government.2
Why? Markets like certainty.
And splitting governance between both parties typically means fewer sweeping policy changes that could introduce uncertainty.
You can see in the chart below how markets have performed (on average) depending on which party controlled Congress when a Democrat was in the White House.
Does this mean we can count on a rally?
No. Mainly because markets are driven much more by fundamentals and economics than politics.
And, political gridlock is not always good. Brinksmanship over issues such as debt ceilings, federal budgets, and government shutdowns could cause instability and market volatility.
It's easy to let the whirlwind of headlines and uncertainty draw us into short-term thinking and worry about the future.
But what if we consciously paused and asked a deeper question?
What are you grateful for right now?
I ask because gratitude pulls us away from the daily stressors and irritants to remind us of what truly matters.
I am deeply, abundantly grateful.
For my health.
For the food in my fridge.
For the roof over my head.
For my circle of family and friends.
For my community that has given me a home.
For my amazing clients and partners who have given me a vocation.
I'm grateful for you.
Thank you from the bottom of my heart for your trust and partnership this year. May you and your loved ones enjoy a wonderful Thanksgiving full of joy and memories.
What are you grateful for today?
The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.