The Tell: Stocks and elections: Why the conventional wisdom might be wrong in 2018

Stocks typically rally after midterm elections, with the S&P 500 gaining an average 31% in the following year. But according to Goldman Sachs’ chief equity strategist, David Kostin, investors should be wary of betting that pattern will hold after voters go to the polls on Nov. 6.

Typically, the run-up to a midterm election inspires uncertainty among investors that quickly dissipates once the results are known. “Markets can be jittery ahead of major events like elections,” wrote Ryan Detrick, senior market strategist at LPL Research, in a recent note to clients. “Once the uncertainty is resolved in November, solid fundamentals and favorable seasonality could take over for a nice year-end rally.

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