Market Insider

Why investors love midterm election years

Post election history on side of bulls

For all the deep and thoughtful analysis of how a changing congressional landscape will affect the economy and markets, some investors are turning to a very simple strategy to profit from the midterm elections: Buy an index fund!

There's a reason why investors salivate when midterm elections cycle through. It's been a very bullish catalyst for the markets, and has been for decades. According to Chief Equity Strategist Sam Stovall of S&P Capital IQ, the seasonality associated with midterms has brought positive returns for the stock market a lot more than it has brought losses. Stovall notes that since 1946, there have been 17 midterm election years. On average, the return between Oct. 31 of the midterm year and Oct. 31 of the following year has been an eye-popping 17.5 percent. What's even more staggering is how many times the index has produced a positive return … 17.