October was a bit of a tug of war. Stocks set fresh records early in the month before a pullback in technology names, bond yields climbed to levels we have not seen in more than two decades, and the Fed held rates steady after September’s hike while leaving the door open to another in December. And by the time you read this, the midterm elections will be behind us.
Every election season brings the same two questions. If the side I disagree with wins, should I get more defensive? If my side wins, should I lean in? Both feel sensible. Both are usually a mistake.
Behavioral finance calls this political bias, letting our political views shape what we expect from the economy and the market. Surveys have shown for years that how people feel about the economy swings sharply depending on which party holds power, even when the underlying numbers have barely changed. The economy did not move. The person reading it did.
The market does not vote. It responds to earnings, interest rates, inflation, and the everyday decisions of millions of businesses and households. Historically, stocks have often been choppy in the months leading up to midterm elections and have tended to settle once the uncertainty is resolved, regardless of which party came out ahead. It is the uncertainty, not the outcome, that tends to move markets.
Looking ahead, there is still plenty to digest, from a possible rate increase in December to the usual year end noise. Policies will be debated and headlines will be loud. But a portfolio built around your goals, your timeline, and your income needs does not need to be rebuilt every time the balance of power in Washington shifts. Vote your conscience. Invest your plan.
Past performance is not indicative of future results. This commentary is for informational purposes only and should not be construed as investment advice. All investments involve risk, including possible loss of principal.
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