Mid Term Elections

Much has been made of the importance of the mid-term congressional elections as they relate to the stock markets. J.P Morgan recently released a study showing historical stock market returns by political party control. The three entities identified were; Senate/House/President. The combination that produced the best results were markets when the Senate and House were controlled by the Republicans, coupled with a Democrat president. The average annual return during those years was 15.3 percent. In second place were years in which there was a Republican Senate, a Democrat House and a Republican President. The S&P 500 averaged 10.5 percent during those years. The worst combinations were when all three entities were controlled by the same party, with all Democrat producing average annual gains of 5 percent and all Republicans coming in at 3.3 percent.