As we begin navigating through 2026, history offers a valuable lesson for what investors might expect for the year ahead. Midterm election years have historically served up the bumpiest rides in the presidential cycle, but investors who understand this pattern are better equipped to stay focused when the political noise and headlines turn dramatic.
Looking back to 1950, data shows midterm years historically experience the biggest intra-year drawdowns of any point in the presidential cycle, with an average drop of -17.5%. However, these same years have still managed to deliver positive full-year returns, averaging 4.7%. This highlights how periods of volatility and gains can occur in the same year.
There’s also a recognizable rhythm to how midterm years can unfold. While every year is unique in itself, markets tend to experience heightened uncertainty in the first half of the year as investors weigh potential policy shifts. However, momentum tends to improve in the second half of the year as the picture becomes more clear, with a stronger finish toward year-end as all the dust settles.
The good news? We’re already running ahead of schedule. While the typical midterm year path shows markets still finding their footing at this point in January, this year has started on a more positive note. It’s still not unreasonable to expect some bumps along the way if historical trends hold true, but the strong start is encouraging.
If volatility picks up as we move through 2026, don’t let it derail your long-term plan. History suggests that choppy midterm years are normal, not alarming. Stay focused on your goals, maintain your investment strategy, and remember that short-term noise rarely matters as much as it feels like it does in the moment.
– The Aspire Wealth Team
January 2026 Market Update Video
