Election Year and Market Volatility

By Nathan Goodwin
People in Voting Booths
This week has brought a welcomed stabilization and slight turn around in the market after a seeing a downward trend the past few weeks. Investors are having to balance the improving economic data in the U.S. with turmoil over seas in Russia, the Ukraine, Gaza and others, as well Argentina defaulting on a debt obligation. Having not seen a 10% correction since 2012, many analysts are not overly surprised by this recent dip, but do remain positive on the market overall. In fact, history tells us that a correction should be no surprise.

Bloomberg research shows that the market drops 60% of the time during the second and third quarters in a midterm election year, as opposed to falling 38% of the time during these quarters in a typical year. Frequently, the market sees a reversal of this trend later in the year when the uncertainty of the elections has passed. While this may present some buying opportunities, there’s a lot to balance in the markets right now as discussed above. Remember, the long term approach wins the race. This article from the Wall Street Journal goes into more detail on market behavior in a mid-term election year.

With everything going on in the markets, now is a good time to revisit your financial plan. We’re available as a resource anytime you need us.

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