Last night, Democrats won control of both the House and the Senate.
And as the results rolled in, the market did what markets do with uncertainty. It flinched. Nasdaq-100 futures fell as much as 2.4% overnight. S&P 500 futures dropped about 1.4%.
Then morning came.
By the opening bell, the whole thing had reversed. Within minutes of the open, the Dow was up more than 1,100 points.
Panic at midnight. Rally by breakfast.
I’ve watched enough of these cycles to know that the overnight move is mostly noise. But I was curious what the longer history says. So I dug in.
What happens after midterms
Here’s what the data shows going back to 1950.
S&P 500, 6 months after a midterm: Higher after all 19 elections. Average gain: +14.1%.
S&P 500, 12 months after a midterm: Higher after all 19 again. Average gain: +15.1%. That’s roughly double the +7.3% from the same starting point in other years.
Nasdaq Composite, 6 months after a midterm: Averaged about +18% since the index was created in 1971, and positive every time.
Nasdaq Composite, 12 months after: Higher in 12 of 13 cycles since 1974.
One more number stood out to me. Coming into this election, the Nasdaq was already down about 8.8% from its October high. Historically, when the Nasdaq fell in the three months before a midterm, it averaged a 23.8% gain over the next six months.
Nineteen for nineteen is a remarkable streak.
Averages aren’t forecasts
I want to be honest about what these numbers are. And what they aren’t.
Nineteen elections is a small sample. Averages hide a wide range. The best year after a midterm was about +33%. The weakest barely broke even at about +1%. And the streak starts in 1950 for a reason. Go back further, and the 1930s produced real losses.
History rhymes. It doesn’t promise.
So I don’t build my plan around a chart of election cycles. I build it around something that doesn’t change on election night.
My income checks don’t vote
Here’s what I keep coming back to.
My portfolio pays me from dividends and option premiums. Those payments don’t care who holds the gavel. The checks I collected last month will look a lot like the checks I collect next month, whether the market is up two percent or down two percent this week.
That’s the whole point of how I built this. Every dollar has a job. And the job of my income dollars is to show up, regardless of the headlines.
So the morning after an election, I’m not asking who won.
I’m asking one question.
Does my income still cover my life?
If the answer is yes, a wild night in the futures market is just something interesting to watch. If the answer is no, that’s the real problem to solve, and no election result fixes it.
Run your own numbers
This is exactly why I built the Freedom Calculator. It’s free, and it shows how close your income is to covering your life, and how long it could take to get there.
👉 https://freedom.riconasol.com/
I also broke all of this down in a short video. If you’d rather watch than read, it’s on my YouTube channel.
And if you want to see what I actually do in weeks like this, my full portfolio and every move, that’s what this Substack is for.
Messy action beats no action. Run the numbers, then decide.
Talk soon,
Rico