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History Shows Right Now Could Be a Fantastic Time to Invest in the Stock Market. Here's Why.
The Motley Fool • • business
Key Points:
- Midterm election years historically yield the lowest average stock market returns, with the S&P 500 averaging just 4.9% gains compared to its typical 10% annual return since 1957.
- Despite this trend, in the current midterm year, ETFs like the Invesco QQQ and Vanguard S&P 500 have outperformed expectations, posting year-to-date gains of 19.5% and 14.7%, respectively.
- Long-term investors are encouraged to maintain or increase equity exposure through broad-market ETFs, as the year following midterms (the third year of the presidential cycle) historically delivers the strongest market performance, averaging gains around 14.5%.
- The Invesco QQQ ETF’s heavy weighting (83%) in technology and consumer cyclical sectors aligns well with the typical economic stimulus efforts presidents undertake in the third year of their term, potentially positioning investors for significant upside in 2027.
- Overall, historical market patterns suggest that staying invested through midterm election volatility can be beneficial, with ETFs like QQQ and VOO serving as practical tools for both rookies and experienced investors.
