Gridlock is Good for the Markets

The markets asked, and they received. U.S. stocks rallied today after the midterm election results came in about as expected.  Investors were bullish following the results due to the belief that gridlock in Washington will help support the markets.  Historically, equity markets see stronger returns when Congress is divided.  With the Democrats taking the House, and the Republicans retaining the Senate, the outcome is a split Congress.  Going back nearly 60 years, a divided Congress has had the best track record for stocks.

 

On the horizon are more discussions about the Federal Reserve, interest rates, tariffs, and corporate earnings.  Be wary of daily headlines and stock market prognosticators making predictions for 2019. Many of these commentators are quick to express their opinions, with the hopes of gaining more twitter followers and selling advertising for their own personal positioning. (See Can I Get Your Attention, Please?)  We are here to help you – our clients – as mentors, fiduciaries, advocates and in making educated decisions for planning out some of the best years of your retirement.

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