The Post-Midterm Window — History's Favorite Entry Point
S&P 500 performance from late October of midterm election years
Within the four-year presidential cycle, October of midterm election years has historically been the single best buying month, with the following twelve months averaging roughly 15% for the S&P 500. The usual explanation is that midterm years absorb policy uncertainty that resolves once the election passes, whatever the outcome. This chart overlays market performance from late October of every midterm year since 1974, so the consistency — and the exceptions — are visible.
| Date | 1M return | 1Y return | 5Y return |
|---|---|---|---|
| 1974-10-01 | +17.2% | +32.3% | +73.5% |
| 1978-10-02 | -9.5% | +5.4% | +65.2% |
| 1982-10-01 | +11.1% | +37.1% | +162.5% |
| 1986-10-01 | +4.3% | +37.8% | +65.6% |
| 1990-10-01 | -3.5% | +23.1% | +84.7% |
| 1994-10-03 | +1.4% | +26.0% | +174.7% |
| 1998-10-01 | +11.4% | +30.1% | +5.4% |
| 2002-10-01 | +5.0% | +20.1% | +81.6% |
| 2006-10-02 | +3.5% | +15.6% | -17.4% |
| 2010-10-01 | +3.3% | -1.3% | +73.3% |
| 2014-10-01 | +2.5% | -1.1% | +49.6% |
| 2018-10-01 | -8.3% |
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
The historical strength after midterms has not depended on which party gained seats. Markets appear to reward the removal of uncertainty itself — once the composition of Congress is known, one overhang is gone regardless of the result.
Seasonal regularities rest on small samples and can fail in any given cycle, especially when a larger force — a credit crisis, a pandemic, an inflation shock — dominates the calendar effect. The overlay shows each individual path, not just the average.
Calendar patterns are best used to inform the timing of decisions you already planned to make, not to generate trades on their own. A favorable historical window doesn't change what an appropriate allocation looks like.
Rather than trading the calendar, consider using the post-midterm window as a scheduling device for actions already on the list — deploying idle cash toward target allocations, executing a planned rebalance, or making scheduled contributions. The value is in attaching planned decisions to a disciplined date, not in adding equity risk because of a seasonal average.