By Richard Carlquist, CFP^®, AIF^®

When I saw the chart below, I immediately thought of the line often attributed to Mark Twain: “History doesn’t repeat itself, but it often rhymes.”

As we move closer to the midterm elections, I think that’s a useful way to look at what may be ahead. Historically, volatility has tended to rise around midterm elections. And with markets near record highs and valuations still elevated, we shouldn’t be surprised to see volatility continue over the next few months.

History gives us context, and right now it’s a useful reminder: periods of uncertainty are part of investing and part of what we plan for.

What does midterm election volatility tell us?

I’m not making a call on where the market goes from here. I am saying we should be prepared for a bumpier stretch.

The chart above shows that median monthly realized volatility for the S&P 500 has historically been higher during midterm election years than across all years since 1974, particularly as elections approach and in the months that follow.

That gives us context, not a script. More volatility does not tell us where markets will ultimately finish.

This isn’t our first rodeo

I’ve spent more than 30 years around markets, and one thing I’ve learned is that uncertainty rarely feels routine while you’re living through it.

Every period has its own headlines: elections, recessions, inflation, wars, interest-rate cycles, and policy changes. The details change, but the challenge for investors is remarkably consistent: knowing the difference between something that deserves our attention and something that requires action.

There’s a saying I love: Investments are like soap. The more you handle them, the smaller they can get.

That doesn’t mean we sit still. We’re continually reviewing portfolios, market conditions, and opportunities. If tax-aware adjustments make sense, we’ll evaluate them thoughtfully. Any changes we make will be grounded in your goals and the strategy we’ve already built together, not a reaction to the latest headline.

Perspective matters most when markets feel uncomfortable

Another chart helps put shorter periods of market weakness in a much broader context.

Historically, bull markets have lasted considerably longer than the bear markets that preceded them. In the Capital Group data shown above, the average bull market lasted 67 months and produced a cumulative price return of 265%, compared with an average bear market of 12 months and a decline of 33%.

Those averages cannot tell us what the next market cycle will look like. They do reinforce why we are careful about allowing temporary declines to dictate long-term decisions.

What are we doing as the midterms approach?

As we move toward the midterms, our team at The Manning Companies will continue doing what we always do: watching. If volatility picks up, that would not surprise us. Periods like this are part of what we expect when building long-term strategies for our clients.

We’re reviewing market conditions, portfolio positioning, and opportunities that may emerge as markets move. Where changes make sense, we’ll evaluate them thoughtfully and with an eye toward tax efficiency. Where patience is the better decision, we’ll exercise it.

If you’re still accumulating: Continue to add money according to the strategy we’ve established. Volatility can be uncomfortable, but interrupting a long-term investment plan can work against the discipline it was designed to create.

If you’re taking distributions: Know that periods of volatility were part of the equation when we built your strategy. Markets will not move upward in a straight line, which is why we consider your income needs, liquidity, and investments together.

The plan remains the anchor

We don’t know how much volatility we’ll see over the next several months or where markets will ultimately go. We don’t need to know in order to plan well.

We expect periods of volatility and uncertainty, and we build financial strategies with that reality in mind.

We’ll keep our eye on the markets, the election cycle, and the risks and opportunities that develop along the way. That is part of our job. For you, the anchor remains the same: the goals we’ve established together and the long-term plan built around them.

As always, if the headlines have you thinking about your portfolio, your plan, or how we’re thinking about the current environment, our team is here.

The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of The Manning Companies and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.