As investors, we know that financial markets dislike uncertainty. But with elections – especially mid-term elections – comes uncertainty, causing concern for some investors. And with midterm elections just around the corner, political headlines are beginning to intensify. So, today’s weekly market commentary examines politics and investing, making the case that control of Congress has had little impact on investment returns.
The enclosed chart shows the average annual total return of the S&P 500 Index from 1933 to 2025 under three different scenarios. The first scenario, represented by the dark blue bar, is the average return under a unified government in the United States. Unified government indicates White House, House and Senate are all controlled by the same political party.
The second scenario, represented by the light blue bar, is the average return under unified Congress with the President in another party. Obviously, unified Congress indicates the House and Senate are controlled by the same party, but the White House is controlled by a different party.
And then the final scenario, represented by the green bar, is the average return under split Congress. Split Congress indicates the House and Senate are controlled by different parties, regardless of the White House control.
As can be seen from the data, the S&P 500 averaged double-digit annual total returns from 1933 through 2025 under every major congressional-control scenario:
- Unified government: 14.5%
- Congress controlled by one party and the presidency by another: 11.7%
- Split Congress: 13.8%.
The piece explains, “although midterm election years have exhibited these trends in aggregate over long periods, it is important to remember that each year follows its own path. Midterm elections, and politics as a whole, generate a lot of noise and uncertainty. But the reality is that long-term equity returns are generated by the value of individual companies over time. A prudent investor should look past the short-term volatility spikes that elections can bring and maintain a long-term focus.” – MFGEOS-450-0526P
Although elections can create short-term uncertainty and volatility, long-term returns are driven more by company fundamentals – earnings, innovation, and business growth – than they are by which party controls Washington. The key takeaway is straightforward: avoid allowing political preferences or election-year headlines to derail a well-constructed financial plan. Staying diversified, disciplined, and focused on long-term goals.
We would ask that you review the attached piece at your convenience and please let us know if you have any questions or if you would like to discuss it further. And as we always end this correspondence, please remember that regardless of current momentum and regardless of the key takeaways in this weekly perspective, we will continue to monitor and manage with a thoughtful approach based on your specific long-term objectives.
