The mid term pattern

Midterm years: first the drawdown, then the rebound. 13 times out of 13.

Chart 1 👇 Every midterm year since 1974 has delivered a drawdown.

📉 The range runs from -7% (2014) to -35% (1974).

📉 The average is about -18%.

📉 Six of the 13 fell 20% or more.

Chart 2 👇 Now look at the 12 months after the election.

📈 All 13 were positive, with an average of about +13.6%. Counting back to 1950, it's 19 for 19.

📈 The range runs from +1% (1986) to +27% (1994).

📈 The worst drawdowns were followed by solid gains: 1974 (-35%, then +19%), 2002 (-34%, then +15%) and 2022 (-27%, then +15%).

Why the pattern? all midterm market troughs occurred before the elections. Markets don't price in who wins. They price in the end of uncertainty.

Two caveats:

⚠️ Some gains were small. Five of the 19 post-midterm years since 1950 gained less than 7%.

⚠️ 2026 looks different so far. The S&P 500 was up 13.1% year to date in mid-October, with a worst drawdown of about 9%, well short of the typical midterm-year decline.

History is a base rate, not a promise. So what comes next in 2026? 👇.

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