Democrats have taken control of the House and Senate.
asserted
Democrats → take → House
President Donald Trump remains in the White House.
asserted
Trump → remain → House
Democrats are celebrating.
asserted
Democrats → celebrate → ?
And millions of Americans are staring at their retirement accounts wondering one thing: What the heck does this mean for my 401(k)?
asserted
this → star → 401(k
Should you sell stocks?
asserted
you → sell → stocks
Before you make a move, you might want to look at what history actually tells us.
uncertain
history → make → us
Because this particular combination of political power has produced some surprising stock market results.
asserted
combination → produce → results
According to research from RBC Wealth Management and Bloomberg, the S&P 500 has historically averaged just 4.9% annually when a Republican president faces a Democratic-controlled House and Senate.
uncertain
president → accord → House
That's the lowest average among six political configurations studied from 1953 through 2025.
asserted
That → study → 2025
Compare that with the other combinations:
- Republican president, Republican Congress: 13.3%
- Republican president, split Congress: 7.3%
- Republican president, Democratic Congress: 4.9%
- Democratic president, Democratic Congress: 8.0%
- Democratic president, split Congress: 17.0%
- Democratic president, Republican Congress: 16.3%
Those are historical annual price returns, excluding dividends, not predictions for 2027.
asserted
Those → compare → 2027
But here's what should catch your attention.
asserted
what → catch → attention
Not all political gridlock has produced the same stock market results.
asserted
gridlock → produce → results
And anyone telling you Wall Street always loves divided government isn't looking at the complete numbers.
asserted
Street → tell → numbers
But here's the midterm surprise
Before you start selling everything in your retirement account, there's another statistic you need to know.
asserted
you → start → account
According to Capital Group, the S&P 500 has averaged a 15.4% gain in the 12 months following midterm elections since 1950.
uncertain
S&P → accord → 1950
Every post-midterm 12-month period in that study produced a positive return.
asserted
period → produce → return
One explanation is that markets dislike uncertainty.
asserted
markets → dislike → uncertainty
Before elections, investors worry about taxes, regulations, spending and which party will control Washington.
asserted
party → worry → Washington
Once the election is over, some of that uncertainty disappears.
asserted
some → disappear → uncertainty
Wall Street may not like the election results, but it often likes knowing the results.
uncertain
it → like → results
Gridlock isn't always good for your money
When Democrats control Congress and Trump controls the White House, passing major legislation generally becomes more difficult.
asserted
passing → control → legislation
Tax changes require negotiation.
asserted
changes → require → negotiation
Spending bills can become political battlegrounds.
asserted
bills → become → ?
Government shutdowns and debt-ceiling fights can create uncertainty.
asserted
shutdowns → create → uncertainty
Some investors welcome the reduced likelihood of sweeping policy changes.
asserted
investors → welcome → changes
Others worry that Washington won't be able to address serious fiscal challenges.
asserted
Washington → worry → challenges
But remember something important: The stock market doesn't rise or fall simply because politicians agree or disagree.
asserted
politicians → remember → something
Corporate profits, inflation, interest rates and economic growth still drive long-term investment performance.
asserted
profits → drive → performance
And historical political averages don't prove that congressional control caused those returns.
asserted
control → prove → returns
Four things I'd watch in 2027
First, corporate earnings.
asserted
I → watch → 2027
Companies making more money can support higher stock prices regardless of who's running Congress.
asserted
who → make → Congress
Federal Reserve decisions and inflation could have a much bigger impact on your portfolio than congressional gridlock.
uncertain
decisions → have → gridlock
Will see another two or three rate hikes if inflation stays stubborn?
asserted
inflation → see → hikes
Major changes to corporate, capital gains or individual income taxes would face significant political hurdles.
asserted
changes → face → hurdles
Budget battles could affect Treasury yields, borrowing costs and investor confidence.
uncertain
battles → affect → yields
According to research from RBC Wealth Management and Bloomberg, the S&P 500 has historically averaged just 4.9% annually when a Republican president faces a Democratic-controlled House and Senate.
uncertain
president → accord → House
These are the issues that can actually affect your financial future.
asserted
that → affect → future
Don't let your politics destroy your portfolio
I've spent decades watching investors make one of the biggest mistakes in personal finance.
asserted
investors → let → finance
They confuse political disappointment with investment strategy.
asserted
They → confuse → strategy
They sell stocks because they dislike the president.
asserted
they → sell → president
…and 12 more, not listed.
The Aporia
