How Might Midterms Influence Stocks?

Ken Fisher of Fisher Investments discusses how midterm elections may affect stocks, focusing on historical market patterns around a president's second year in office. He argues the fourth quarter of that year begins what he calls the most consistently positive nine-month stretch in stock market history, and that political gridlock tends to emerge whether or not the president's party loses congressional seats. He also says roughly two-thirds of Senators can begin looking beyond the current president's tenure after the election, which he says reduces the potential for major legislative change.

1. Fisher points to the fourth quarter of a president's second year as the start of a historically positive nine-month stretch for stocks.
2. He says political gridlock tends to emerge regardless of whether the president's party loses congressional seats.
3. After the election, about two-thirds of Senators can start looking beyond the current president's tenure, which he says diminishes the potential for major legislative change.
4. He argues fears around political developments can fade and political risk aversion falls, creating what he describes as a favorable backdrop for stocks.