The US Midterm Elections And What They Mean For Your Portfolio

The US Midterm Elections And What They Mean For Your Portfolio
Paul Allison, CFA

over 1 year ago1 min

The final votes are still to be tallied, but it’s not looking like the Republican party will get the “red wave” of victories that would help it seize control of both the House of Representatives and the Senate. With votes still to count, it’s looking more like the Democrats will keep control of the Senate, but lose control of the House.

That’s going to mean a shift in Washington, DC, where both chambers of Congress (the House and the Senate), and the White House have been controlled by the Democrats for the past two years. And with the gridlock that could result, that’ll mean that lawmakers are less likely to be doing much, well, law-making over the next couple of years. It could mean no agreement on the debt ceiling, no new tax policies, no reigning in government spending, and maybe no ramping it up either if the US slips into a deep recession.

But as far as the markets are concerned, that’s all just noise. As you’ve probably heard, markets dislike uncertainty and with a gridlocked political system, you can at least be certain that close to nothing major will happen. One other thing: politics ebb and flow, but in the long arc of time they tend to have very little, if any, impact on financial markets.

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