Periods of market volatility, while uncomfortable, are a normal and expected part of long-term investing. This is especially true in midterm election years, which have historically introduced an additional layer of uncertainty. For some investors focused on specific asset classes and sectors, such as digital assets (Bitcoin) and software companies, recent market activity may have felt more volatile than usual. The overall market data, however, reminds us that from a diversified portfolio perspective, what we’ve experienced at the start of 2026 is quite normal, if not mild. The following chart highlights that, on average, there are 31 days in a given calendar year where the market falls by more than 1%. As of February 16th, we have experienced only three.
Total # of S&P 500 1% Down Days
In terms of midterm election years, volatility tends to rise and is often accompanied by range-bound market levels in the first half of the year. In fact, research shows that the S&P 500 can experience notable pullbacks—often 10% or more—during the months leading up to midterms. With future policy direction at stake, the lack of clarity on various initiatives can lead to a temporary pullback in risk-taking. But the key is the word temporary.
Average Midterm Year Path of S&P 500
While these swings and periods of sideways results can test our collective patience, they are far from a reason to abandon a long-term strategy. In fact, the same historical data shows that midterm-year volatility has often led to strong recoveries. Capital Group’s research highlights that since 1950, the average one-year return on the S&P 500 following a midterm election has been 15.4%, nearly double the long-term return of stocks.
What does this mean for you?
It underscores the importance of perspective. Volatility is rarely permanent; markets typically recover from periods of uncertainty, often more quickly than expected once clarity returns. While headline noise and short-term pullbacks can rattle any investor, they do not typically require changes to a well-constructed financial plan. This is where disciplined investing matters most. A sound portfolio is built to weather turbulence, not avoid it. Diversification, thoughtful asset allocation and alignment with your goals remain your strongest defenses. Evidence shows that attempting to time the market around political events is not reliable, as fundamentals, not elections, ultimately drive returns. There is a saying that to be a successful investor, you must be able to separate what’s merely interesting from what is truly important. Midterms are interesting; staying invested for the long-term is truly important.
We work together to make sure you are continually aware of both the interesting and the important to ensure your investment strategy remains aligned with your long-term objectives, not short-term market noise. Staying invested, maintaining composure and trusting the process have historically rewarded disciplined investors. Periods of volatility are reminders that patience is not merely a virtue — it is a large contributing factor to long-term financial success.