Look Past the Voting Machine

“In the short term, the market is a voting machine. In the long run, it is a weighing machine.”^[i] Legendary investor Benjamin Graham’s famous quote is timely today, as investors everywhere seem enthralled by popular post-election narratives aiming to divine meaning from a rocky (in both directions) couple days. Our advice? Slow down. There is nothing in the election’s choppy immediate aftermath suggesting the Midterm Miracle isn’t coming this time. Given a little time, we expect stocks to return to weighing gridlock and persistent economic growth—and find a bullish backdrop.

America’s S&P 500 Index flipped from jumping 1.6% Wednesday to falling -4.4% Thursday, bringing post-Election Day returns to -2.8%.^[ii] AI-related stocks lagged in Wednesday’s rally and led the selloff downward on Thursday, with the Nasdaq falling into a correction (a short, sharp, sentiment-driven decline of -10% to -20%). Overseas markets fell less, so everyone concludes markets are wrestling with big midterm election implications for everything from AI to taxes to energy, especially if the Democrats win the White House in 2028.

This is only natural. The election was a major political event, stirring both hope and fear simultaneously. After all, while some 48 House races aren’t tallied yet, Associated Press projections suggest the Democrats will hold 258 seats to the Republican’s 177—the largest margin for either party since 1994’s midterm election.^[iii] It is a surprisingly big shift alongside their Senate win. Headlines tout this as a mandate for change—especially if it carries into 2028’s presidential race.

History is less clear on that. Even some big midterm shifts (2010, 1994) didn’t foretell who would win the White House two years later. In politics, two years is an eternity. A whole lot could and will change between now and then in presently unknowable ways. So when you see articles admitting that, yes, we have formal gridlock today but big policy shifts await in 2029^[iv], we counsel kindly placing them in the circular file.

The drop’s AI- and chip-led nature feeds narratives of state-level election outcomes (particularly governorships in Ohio and Texas) slamming data-center buildouts necessary to keep fueling the AI boom. But as we covered yesterday, NIMBY-ism and local planning boards were already slowing development. While there are likely some Tech losers from slower investment, there are also winners: To the extent data-center investment cools, it should allow big players with existing facilities to maintain a competitive advantage while slowing the capex spending markets have become critical of. Perhaps frontier developers, startups or those on the margins face headwinds. But that, too, isn’t exactly new.

We don’t expect Tech to lead, but the notion it will continue slumping like Thursday commits the error of hunting “election losers” too fast. It is also first-order thinking, without regard to markets’ adaptability, efficiency and sentiment. Consider: For months, people have feared AI was this bull market’s sole support. Sentiment-driven volatility often gives people the sense markets have dealt with their worry. Perhaps, with a little bit of time, Tech’s slide will have that effect, allowing them to move on.

A day or two’s moves never predict where markets head—even amid the Midterm Miracle’s strongly bullish history. In 2022, on the heels of a bear market, the S&P 500 fell -2.1% the day after the election.^[v] It flipped positive the next day and finished the nine-month window up 17.6%.^[vi] 2018’s Miracle stretch began poorly, amid a steep correction that ran through Christmas Eve.^[vii] It ended up 8.3% from Election Day.^[viii] Returns from Election Day to November’s end were slightly negative in 2010. By the Miracle window’s close? Up 12.2%.^[ix] We could go on.

The pairing of high volatility (up and down) with big political news and opinions is a powerful emotional cocktail. But when it comes to investments, it is poison. This week’s headlines and choppy markets call for an even-keeled response, hard as that can be.

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[i]The Maxims of Wall Street, Mark Skousen, Forecasts & Strategies, 2011.

[ii] Source: FactSet, as of 11/5/2026. S&P 500 price returns.

[iii] Source: Associated Press and the House of Representatives Art, Archives and History, as of 11/5/2026.

[iv] “How Your Finances Could Change if Democrats Repeat Their Win in 2028,” Dalvin Brown, Ashlea Ebeling and Miriam Gottfried, The Wall Street Journal, 11/5/2026.

[v] Source: FactSet, as of 11/5/2026. S&P 500 total return index.

[vi] Ibid.

[vii] Ibid.

[viii] Ibid.

[ix] Ibid.