History Shows Right Now Could Be a Fantastic Time to Invest in the Stock Market. Here's Why.

History Shows Right Now Could Be a Fantastic Time to Invest in the Stock Market. Here's Why.

Todd Shriber, The Motley Fool

Mon, August 17, 2026 at 4:05 PM GMT+3 4 min read

Experienced investors know that politics and Wall Street often intersect. Compounding that issue in the near term is this year's status as a midterm election year.

No candidates or parties are being endorsed here; the "stump speech" is about why investors of all experience levels should be students of market history. Rookies and experienced investors alike may find it easier to stay the course with exchange-traded funds (ETFs) such as the Invesco QQQ ETF (NASDAQ: QQQ) and the Vanguard S&P 500 ETF (NYSEMKT: VOO).

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On multiple levels, history bodes well for the Invesco fund and the VOO ETF. Let's examine why.

Time to open the market history books

One of investing's oldest (and frequently proven accurate) sayings is: "History doesn't always repeat, but it often rhymes." So let's talk history. Since 1957, the S&P 500 has notched average annual returns of 10%, confirming the benefits of long-term investing.

However, history also says that of the four years in the presidential cycle, the midterm election year is the worst for stocks. In those years, the S&P 500 averaged a gain of just 4.9%, or less than half the historical average. But even when accounting for that somewhat ominous history, the QQQ ETF and its Vanguard S&P 500 counterpart are up 19.5% and 14.7%, respectively, year to date.

Under any circumstances, those are impressive showings, and they confirm the validity of not pulling out of stocks due to electoral headlines. But the returns delivered by the Invesco and Vanguard ETFs this year are all the more noteworthy when you consider that midterm election-year lethargy for stocks isn't a new phenomenon. In financial market terms, it's almost ancient. Since 1950, the midterm year has, on average, been the one in which stocks delivered the smallest gains or worst performance.

A lot can change between now and November, but with equities defying midterm-election-year precedent, it's clear that stocks are in a strong position. Another history lesson underscores why that's important to investors shopping today.

Another history lesson

If you're planning to play the long game, you may want to consider buying stocks in the near term for another reason, one backed by historical precedent. While the midterm election year is usually the most trying for equities, the following year is typically the best.

Who would want to ditch the Vanguard S&P 500 ETF today when the index it tracks delivers an average gain of 14.5% in the third year of the presidential cycle? The answer should be "nobody." Reasons abound as to why the third year is usually the best, but some experts believe it's because presidents, regardless of party, are looking to juice the economy. That can benefit growth stocks and consumer names. Good news: The Invesco QQQ ETF allocates nearly 83% of its weight to technology and consumer cyclical stocks.

If you're a long-term investor, you can tap into practical ETFs, such as the Invesco QQQ ETF and the Vanguard S&P 500 ETF, to get through this year -- while positioning for what could be impressive upside in 2027, if history holds up.

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Todd Shriber has positions in Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

History Shows Right Now Could Be a Fantastic Time to Invest in the Stock Market. Here's Why. was originally published by The Motley Fool