by Gary Alexander

June 7, 2022

Two weeks ago, on May 24, I wrote about the great Memorial Day market bottoms and recoveries in June 1962 and 1970 as typical of the ultra-strong mid-term election year market surges – except that these two surges came earlier than the norm. Lest you think I was cherry-picking top years, I’ll show all the gains from all mid-term election years 1950-1998, and you’ll see 1962 was sub-par and 1970 was average.

Nothing is more important in a bear market year like this than to demonstrate hope from history, but to come up with a fresh angle on this old subject, Louis Navellier, Jason Bodner, and I were tossing around ideas at our regular Friday morning conference call when Louis asked, “The Fed won’t like to raise rates much late in an election year, so won’t they stop raising rates after Labor Day?” To find the answer, I quickly scanned the last five mid-term election years and I found this not to be true. I found a suspicious amount of Fed activity during mid-term election years. As Louis suspected, there is not much Fed action in the fall of Presidential election years, so I tentatively wondered if maybe the Fed – like most voters, politicians, investors, and others who focus on “the next King” – tend to overrate the Presidency and underrate the impact of mid-term Congressional changes, so the Fed plows ahead with rate changes.

I found so much data, I’ll probably have to cut this survey short, saving the 21st Century for next week.

In 1974, Fed Chairman Arthur Burns (serving January 1970 to March 1978) was a Nixon appointee (and friend) who often did the politically expedient thing rather than remain politically independent. As a result of overprinting dollars (at Nixon’s request), we were in a recession with inflation at 11% and unemployment at 7.2%, giving rise to a new term “Stagflation.”  Burns raised rates while Nixon was in office (Nixon resigned August 8), and then he cut rates after the mid-term election, giving a boost to Gerald Ford, Nixon’s successor.

1974 Fed Rate Changes (Pre-election)
March 9: Burns raised rates 1%, from 9% to 10%
April 16: Raised rates 1%, to 11%
July 16: Raised rates 2%, to 13%
After election:
Burns cut rates 5%, back to 8%

Result: In 1975, inflation was still high, at 9.1%, unemployment rose, and the GDP was still negative, -0.2%, but the S&P rose over 53% in just over nine months from the bottom of a long 1973-74 bear market.

In 1978, new Fed Chair William Miller (serving March 1978 to August 1979) was another relatively inept political appointee. He immediately began raising rates at a time when inflation was 7.6%, unemployment was 6.0%, and the GDP was soaring (+5.5%), so he managed to kill the economy for President Jimmy Carter.

1978 Fed Rate Changes (Pre-election)
April 19: Miller raised rates 0.25% to 7%
May 17: Raised rates 0.50% to 7.5%
June 21: +0.25% to 7.75%
Aug. 16: +0.25% to 8.0%
Sept. 20: +0.50% to 8.5%
Oct. 18: +0.50% to 9.0%
After Election
Nov. 21: +0.75% to 9.75%
Dec. 20 + 0.25% to 10%

Result: Everything backfired: In 1979, inflation soared to an annual record 11.3% for the full year, amid gas lines throughout the nation. Gold was soaring, unemployment was still 6%, and the GDP dropped to 3.2%

Federal Reserve Chairmen, 1951-1987 Images

In 1982: Fed Chair Paul Volcker (Serving August 1979 to August 1987) first raised Fed fund rates to a crippling 20% before the 1980 election then cut them right before the 1982 mid-term elections. To kill a decade of inflation, he set rates at 20% for much of 1980 and 1981, from March 18, 1980, to mid-1981.

1982 Fed Rate Changes: Pre-mid-term-election
July 15: Volcker cut rates 2.0%, from 15% to 13%, in stages at first
August 24: Cut rates 3.5%, from 13% to 9.5%
After election
December 21: Cut rates 1% to 8.5% when inflation reached 3.8%

Result: Something finally worked: Inflation was 3.2% in 1983, unemployment was 8.3%, and GDP was +4.6%.

In 1986, under Volcker (and Reagan), inflation was just 1.9%, unemployment was 6.6%, and GDP rose 3.5%, That year Volcker lowered rates by 1.43% from April 18 to August 21, from 7.31% to 5.88%. The stock market continued to soar, rising 46.5% from September 29, 1986, to August 25, 1987, but that was the main cause of the 1987 crash – stocks rose too far, too fast. Then they reverted to the mean, in a sharp drop.

In 1990, Fed Chair Alan Greenspan (serving August 1987 to January 2006) made a lot of mistakes, such as raising rates as soon as he became Chairman, contributing to the 1987 crash, but as we entered the 1990 mid-term election year, Saddam Hussein had just invaded Kuwait and there was a massive military buildup there and a quick 20% market decline. Inflation was rising, at 5.4%, as was unemployment, to 6.3%, and GDP was falling toward a recession, at 1.9%, so Greenspan cut rates right before the election, which boosted stocks.

1990 Fed Rate Changes: Pre-election
October 29: Greenspan cut rates 0.5%, from 8.25% to 7.75%
After election
Three more rate cuts in rapid succession, but that didn’t prevent a recession

Result: A short, shallow (-0.1% GDP) recession in 1991, with a 7.3% jobless rate, but a 41% market gain.

In 1994, there was no real threat of inflation or recession, but Greenspan raised rates anyway: Inflation was only 2.6% all year, and GDP grew 4.0% in 1994, but Greenspan doubled rates from 3% to 6% in six stages:

1994 Fed Rate Changes (Pre-election)
February 4, 1994: Greenspan shocked the market with a surprise 0.25% rate increase
March 22: +0.25%
April 18: +0.25% to 3.50%
May 17: +0.50% to 4.0%, doubling down
August 16: +0.50% to 4.5%
After the election
November 15: +0.75% 50 5.25%
Then a final increase to 6.0% in February 1995

Result: Greenspan helped fuel the “Republican Revolution” in Congress, while inflation got slightly worse, at 2.8%, and GDP dropped to +2.7. Meanwhile, the Internet and technology tamed inflation and fueled growth.

In 1998, unemployment was down to 4.4%, inflation was down to 1.6%, and GDP growth was up to 4.5%, but Greenspan lowered rates twice in the fall (before the election) to address the hedge fund crisis spawned by Long Term Capital Management (LTCM) and their overexposure to hedged positions in the Russian ruble.

On that note of déjà vu, let me pause to add up the totals, then continue the story next week.

Federal Reserve Chairs since 1987 Images

Before closing, here’s the positive news for stock investors. From the mid-term election year bottom to the next year’s high, the S&P 500 gained an average of 50% in the 13 mid-term election cycles of 1950 to 1998.

The market low came in October four times (1966, 1974, 1990, and 1998), once in September, and once in August, so we could be in for a huge gain from the second-half low to next year’s high, no matter what the Fed does.

Standard and Poor's 500 Mid-term Election Years Gains Table

Next week: The same sort of story in the mid-term election years of 2002, 2006, 2010, 2014, and 2018.

All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.

Please see important disclosures below.

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander

Important Disclosures:

Although information in these reports has been obtained from and is based upon sources that Navellier believes to be reliable, Navellier does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute Navellier’s judgment as of the date the report was created and are subject to change without notice. These reports are for informational purposes only and are not a solicitation for the purchase or sale of a security. Any decision to purchase securities mentioned in these reports must take into account existing public information on such securities or any registered prospectus.To the extent permitted by law, neither Navellier & Associates, Inc., nor any of its affiliates, agents, or service providers assumes any liability or responsibility nor owes any duty of care for any consequences of any person acting or refraining to act in reliance on the information contained in this communication or for any decision based on it.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any securities recommendations made by Navellier. in the future will be profitable or equal the performance of securities made in this report. Dividend payments are not guaranteed. The amount of a dividend payment, if any, can vary over time and issuers may reduce dividends paid on securities in the event of a recession or adverse event affecting a specific industry or issuer.

None of the stock information, data, and company information presented herein constitutes a recommendation by Navellier or a solicitation to buy or sell any securities. Any specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. The holdings identified do not represent all of the securities purchased, sold, or recommended for advisory clients and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Information presented is general information that does not take into account your individual circumstances, financial situation, or needs, nor does it present a personalized recommendation to you. Individual stocks presented may not be suitable for every investor. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. Investment in fixed income securities has the potential for the investment return and principal value of an investment to fluctuate so that an investor’s holdings, when redeemed, may be worth less than their original cost.

One cannot invest directly in an index. Index is unmanaged and index performance does not reflect deduction of fees, expenses, or taxes. Presentation of Index data does not reflect a belief by Navellier that any stock index constitutes an investment alternative to any Navellier equity strategy or is necessarily comparable to such strategies. Among the most important differences between the Indices and Navellier strategies are that the Navellier equity strategies may (1) incur material management fees, (2) concentrate its investments in relatively few stocks, industries, or sectors, (3) have significantly greater trading activity and related costs, and (4) be significantly more or less volatile than the Indices.

ETF Risk: We may invest in exchange traded funds (“ETFs”) and some of our investment strategies are generally fully invested in ETFs. Like traditional mutual funds, ETFs charge asset-based fees, but they generally do not charge initial sales charges or redemption fees and investors typically pay only customary brokerage fees to buy and sell ETF shares. The fees and costs charged by ETFs held in client accounts will not be deducted from the compensation the client pays Navellier. ETF prices can fluctuate up or down, and a client account could lose money investing in an ETF if the prices of the securities owned by the ETF go down. ETFs are subject to additional risks:

  • ETF shares may trade above or below their net asset value;
  • An active trading market for an ETF’s shares may not develop or be maintained;
  • The value of an ETF may be more volatile than the underlying portfolio of securities the ETF is designed to track;
  • The cost of owning shares of the ETF may exceed those a client would incur by directly investing in the underlying securities; and
  • Trading of an ETF’s shares may be halted if the listing exchange’s officials deem it appropriate, the shares are delisted from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.

Grader Disclosures: Investment in equity strategies involves substantial risk and has the potential for partial or complete loss of funds invested. The sample portfolio and any accompanying charts are for informational purposes only and are not to be construed as a solicitation to buy or sell any financial instrument and should not be relied upon as the sole factor in an investment making decision. As a matter of normal and important disclosures to you, as a potential investor, please consider the following: The performance presented is not based on any actual securities trading, portfolio, or accounts, and the reported performance of the A, B, C, D, and F portfolios (collectively the “model portfolios”) should be considered mere “paper” or pro forma performance results based on Navellier’s research.

Investors evaluating any of Navellier & Associates, Inc.’s, (or its affiliates’) Investment Products must not use any information presented here, including the performance figures of the model portfolios, in their evaluation of any Navellier Investment Products. Navellier Investment Products include the firm’s mutual funds and managed accounts. The model portfolios, charts, and other information presented do not represent actual funded trades and are not actual funded portfolios. There are material differences between Navellier Investment Products’ portfolios and the model portfolios, research, and performance figures presented here. The model portfolios and the research results (1) may contain stocks or ETFs that are illiquid and difficult to trade; (2) may contain stock or ETF holdings materially different from actual funded Navellier Investment Product portfolios; (3) include the reinvestment of all dividends and other earnings, estimated trading costs, commissions, or management fees; and, (4) may not reflect prices obtained in an actual funded Navellier Investment Product portfolio. For these and other reasons, the reported performances of model portfolios do not reflect the performance results of Navellier’s actually funded and traded Investment Products. In most cases, Navellier’s Investment Products have materially lower performance results than the performances of the model portfolios presented.

This report contains statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are “forward-looking statements” within the meaning of The U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “plan,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “project,” or similar statements or variations of such terms. Our forward-looking statements are based on a series of expectations, assumptions, and projections, are not guarantees of future results or performance, and involve substantial risks and uncertainty as described in Form ADV Part 2A of our filing with the Securities and Exchange Commission (SEC), which is available at or by requesting a copy by emailing All of our forward-looking statements are as of the date of this report only. We can give no assurance that such expectations or forward-looking statements will prove to be correct. Actual results may differ materially. You are urged to carefully consider all such factors.

FEDERAL TAX ADVICE DISCLAIMER: As required by U.S. Treasury Regulations, you are informed that, to the extent this presentation includes any federal tax advice, the presentation is not written by Navellier to be used, and cannot be used, for the purpose of avoiding federal tax penalties. Navellier does not advise on any income tax requirements or issues. Use of any information presented by Navellier is for general information only and does not represent tax advice either express or implied. You are encouraged to seek professional tax advice for income tax questions and assistance.

IMPORTANT NEWSLETTER DISCLOSURE:The hypothetical performance results for investment newsletters that are authored or edited by Louis Navellier, including Louis Navellier’s Growth Investor, Louis Navellier’s Breakthrough Stocks, Louis Navellier’s Accelerated Profits, and Louis Navellier’s Platinum Club, are not based on any actual securities trading, portfolio, or accounts, and the newsletters’ reported hypothetical performances should be considered mere “paper” or proforma hypothetical performance results and are not actual performance of real world trades.  Navellier & Associates, Inc. does not have any relation to or affiliation with the owner of these newsletters. There are material differences between Navellier Investment Products’ portfolios and the InvestorPlace Media, LLC newsletter portfolios authored by Louis Navellier. The InvestorPlace Media, LLC newsletters contain hypothetical performance that do not include transaction costs, advisory fees, or other fees a client might incur if actual investments and trades were being made by an investor. As a result, newsletter performance should not be used to evaluate Navellier Investment services which are separate and different from the newsletters. The owner of the newsletters is InvestorPlace Media, LLC and any questions concerning the newsletters, including any newsletter advertising or hypothetical Newsletter performance claims, (which are calculated solely by Investor Place Media and not Navellier) should be referred to InvestorPlace Media, LLC at (800) 718-8289.

Please note that Navellier & Associates and the Navellier Private Client Group are managed completely independent of the newsletters owned and published by InvestorPlace Media, LLC and written and edited by Louis Navellier, and investment performance of the newsletters should in no way be considered indicative of potential future investment performance for any Navellier & Associates separately managed account portfolio. Potential investors should consult with their financial advisor before investing in any Navellier Investment Product.

Navellier claims compliance with Global Investment Performance Standards (GIPS). To receive a complete list and descriptions of Navellier’s composites and/or a presentation that adheres to the GIPS standards, please contact Navellier or click here. It should not be assumed that any securities recommendations made by Navellier & Associates, Inc. in the future will be profitable or equal the performance of securities made in this report.

FactSet Disclosure: Navellier does not independently calculate the statistical information included in the attached report. The calculation and the information are provided by FactSet, a company not related to Navellier. Although information contained in the report has been obtained from FactSet and is based on sources Navellier believes to be reliable, Navellier does not guarantee its accuracy, and it may be incomplete or condensed. The report and the related FactSet sourced information are provided on an “as is” basis. The user assumes the entire risk of any use made of this information. Investors should consider the report as only a single factor in making their investment decision. The report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. FactSet sourced information is the exclusive property of FactSet. Without prior written permission of FactSet, this information may not be reproduced, disseminated or used to create any financial products. All indices are unmanaged and performance of the indices include reinvestment of dividends and interest income, unless otherwise noted, are not illustrative of any particular investment and an investment cannot be made in any index. Past performance is no guarantee of future results.