Why Midterm Years And War Create Buying Opportunities

There are a lot of conflicting stories and memes scaring investors right now. Let’s look at some data, via a few charts that recently landed in my inbox, and make a plan for the rest of 2026.

We begin with the big-picture idea that, over the long term, the market will go higher.  The next few charts are from Charlie Bilello’s recurring blog feature, “The Week in Charts.”    

Let’s start with the number of positive years for the S&P 500 versus down years for the past 98 years:

The green years account for 73%, a nice majority. I think the 0% to 10% down years are great opportunities to generate positive returns, so if you add those in, you have 86 out of 98 years with positive returns from stock investing.

As I write this, the U.S. and Israel are in the third week of their war against Iran. Let’s look at the effect of past wars on the stock market. Here is the S&P total return, with all wars since WWII shown:      

It is very obvious that war, if it puts downward pressure on stocks at all, has a very short-lived effect.

As we move further into the year, midterm elections will probably become the largest news story. An email from ETF sponsor Roundhill Investments included this chart:

My Mark 1 eyeball notes that the chart includes every midterm year since 1950. The average drawdown for those years was 17.5%. The good news is that a year after the midterms, the market was higher 100% of the time, with an average gain of 15.5%.

This historical data gives confidence that buying on the dips, especially as we get closer to the midterm elections, should result in some nice gains in the coming year.

My investment strategies focus on high-yield stocks and ETFs. Using dividends to buy on dips increases your portfolio income and builds wealth as markets move higher.