Since U.S. President Donald Trump’s election in 2016, the Dow Jones Industrial Average has risen over 6,500 points. The S&P 500 is up 600 points. And the Nasdaq has locked in a gain of nearly 2,500.
These historic gains are the result of what many investors call the “Trump bump.” And traders are terrified that “the bump” is in jeopardy due to how midterm elections impact stocks.
You see, markets are terrified political upheaval from the 2018 midterm election will end the “Trump bump” and send the stock market plunging into the red.
So far, yesterday’s election appears to have come and gone, and stocks are still up.
However, you didn’t need to wait until Nov. 6 to find that out.
You see, the truth about the relationship between midterm elections and the stock market can be found in every midterm election going back to the end of the World War II.
And history suggests there’s no reason to panic. In fact, it’s great news for your portfolio…
Investors Are the Midterm’s Real Winners
For the last 18 midterm election cycles, the winners and losers of each election have had little to no impact on stocks.
In fact, stocks have risen following every midterm election since 1946.
That’s 72 years of consistent gains no matter who won or lost control of the federal legislative branch, governorships, and statehouses.
And it’s not a small rise either.
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In every year with a midterm election following the Second World War, the S&P 500 has jumped an average of 18.4% between the month leading up to a midterm election through June 30th the following year.
That’s a 275% increase over the performance in years without any elections at all. In off years, the S&P 500 has only risen an average of 4.9%.
With the 2018 midterm elections in the rearview mirror, it’s highly likely that investors can look forward to significant gains for the foreseeable future.
Despite the promise of strong returns, it’s still incredibly difficult to find the right stocks to buy. Average stocks will saddle you with average returns.
Of course, it doesn’t have to be this way. You just have to know where to look.
And who to listen to…
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