With so much volatility in the stock markets recently, many investors are looking for the light at the end of the tunnel.
Carl Carlson, CEO of Carlson Financial spoke with News 3 about what the results of the midterm elections might mean for markets going forward.
There are dozens of different stories from around the world in the back of peoples’ minds including rising interest rates, Italy, tariffs, Trump, midterm elections, etc. This affects sentiment, which leads to volatility, Carlson said.
Volatility is just a bunch of people trying to rush out the door at the same time and the door is too small. When the stock market subsequently drops, people assume there is meaning there, though that’s not necessarily the case. We’re actually heading into a very historically positive time for the stock market.
If we see again what we’ve seen in the past, then things should rebound and turn positive, according to Carlson. Since 1926, the quarter that includes a midterm election plus the two quarters the follow it have been positive 87% of the time.
This time, Republicans kept the Senate, Democrats took the House and for stocks, this means gridlock.
Carlson added, political gridlock is generally good for stocks because neither party can pass anything controversial. Most importantly, the midterm uncertainty is gone.
Q3 GDP shows continued economic strength and forward looking indicators are strong as well. That doesn’t necessarily mean that volatility will be over, but the outcome of the elections will be known, giving investors one less thing to worry about, Carlson said.