With the U.S. midterm elections just four months away, investors are bracing for heightened market volatility as Democrats and Republicans battle for control of Congress.
While election uncertainty often rattles markets, historical data suggests it has also created compelling entry points for long-term ETF investors.
According to LPL Financial, the market's performance has followed a remarkably consistent pattern across presidential cycles, with weakness during midterm years frequently giving way to a strong rebound once election uncertainty fades.
Midterm Years Have Historically Been The Weakest for Stocks Since 1954, the S&P 500 has posted an average annual return of just 4.6% during midterm years, the lowest among the four years of the presidential cycle, LPL Financial charts show.
Those years have also recorded the largest average maximum drawdown of 17.5% and the highest realized volatility at 15.6%, highlighting the increased market turbulence that typically accompanies congressional elections.
