Mid-term stock market curse and what comes next
Louis Navellier
Sat, 25 July 2026 at 10:03 pm GMT+5:30
4 min read
As we reach the mid-point of the year, we need to face the unpleasant history of mid-term election years as the worst year of the four in a four-year investment cycle
Here’s the good news: The flip side of such a dismal historical track record is the 6-12 months following each mid-term election – netting the strongest market surge of the four-year cycle, by far – partly due to the inevitable hope (“this time is different”) a new Congressional mix will somehow solve all our problems, since all we need is to create more checks and balances in Washington
A history of mid-term market declines
Most mid-term downers were caused by external events more than the market’s internal health. To demonstrate that, let’s review the 10 (of 11) downers since 1962:
1962featured two external crises: the real one, in October, was the Cuban Missile Crisis, but the earlier crisis was when the market tanked, during a spring war between President Kennedy and U.S. Steel. The Dow fell 27% from December 13, 1961, to June 26, 1962, but then it gained 85.7% by February 9, 1966
1966 delivered a short recession disguised as a “credit crunch,” running from February to October, delivering a 25.2% haircut in eight months, followed by a major market recovery in 1967 and 1968
1970brought a tech-stock crash similar to the dot-com bubble of 2000, as the Nifty 50 and an array of computer and software stocks fell up to 80% in the second quarter of 1970. Then came a 50% rebound
1974 capped the worst long-term market collapse (in real, after inflation terms) in the postwar era. The primary cause was the OPEC oil embargo of late 1973, tripling gasoline prices, but we also had major drains coming from the endgame in Vietnam and the Watergate crisis, with President Nixon’s resignation. Then came Ford’s attempt at healing us, and the best single market year since the 1950s, +38% in 1975
1978brought a second oil shock, exacerbated by Carter’s new Department of Energy, resulting in long gas lines and sky-high prices, yielding a sense of malaise and Carter’s loss to Reagan in a “misery index” peak year (1980) of 20% interest rates, 12% inflation and 11% jobless rates – but a 15% market surge
1982 delivered the second of a “double-dip” recessionary blow at the start of Reagan’s first term, in the steep (but mercifully short) inflationary recession of 1982, ending suddenly, with 15-fold gains, 1982-99
1990followed Saddam Hussein’s August invasion of Kuwait. The Dow fell 21.2% from July 17 to October 11, 1990, then rose 20.3% in 1991 and 4.3% in 1992
