Four prominent Canadian financial advisors and portfolio managers have revealed a consistent strategy of inaction regarding client portfolios in the lead-up to the November 3 U.S. midterm elections. This collective stance underscores a prevailing sentiment within the industry: that political outcomes, while capturing public attention, often have a limited and predictable impact on long-term investment strategies. Despite robust predictions from prediction markets and Wall Street’s apprehension, these professionals are prioritizing fundamental investment principles over speculative market timing.
The U.S. midterm elections, a quadrennial event held halfway through a president’s four-year term, are a critical juncture in American politics. They determine the composition of the House of Representatives and a third of the Senate, significantly influencing the legislative agenda for the remainder of the presidential term. Historically, midterms have often seen the party not holding the presidency gain seats, leading to potential shifts in policy and economic direction. This year, the political landscape is particularly charged, with control of Congress hanging in the balance, prompting widespread speculation about its impact on financial markets.
As of October 28, prediction markets indicated a strong probability of Democratic control over both chambers of Congress. Kalshi, a U.S.-based prediction market, assigned a 91% chance of Democrats winning the House of Representatives and a 67% chance of securing the Senate. Similarly, Polymarket, another decentralized prediction platform, projected these figures at 93% for the House and 65% for the Senate. These high probabilities reflect a perceived lean in public sentiment and expert analysis towards a Democratic victory, which, according to some analyses, could lead to market volatility.
However, the consensus among the surveyed Canadian advisors is that these political probabilities are not a catalyst for portfolio adjustments. In direct communication with Wealth Professional, each advisor confirmed that their allocation decisions are divorced from political forecasts, and none have repositioned client assets in anticipation of election results. This approach stems from a deep-seated belief in the resilience of markets and the limitations of predicting short-term political impacts on asset prices.
A Bloomberg report highlighted that Wall Street is anticipating a potential stock market downturn if Democrats secure control of both the House and the Senate. This concern is rooted in the potential for policy shifts that could affect corporate earnings and economic growth. Historically, periods of divided government or a shift in power have sometimes been associated with increased market uncertainty.
Despite these concerns, the market’s performance in the months leading up to the election has provided little incentive for advisors to deviate from their strategies. Nick Giorgi, Chief Equity Strategist at Alpine Macro, noted in a CNBC interview that the S&P 500 had already experienced an 11% surge in the nine months preceding the vote. This figure stands in stark contrast to the average gain of 1.6% observed across the last 14 midterm election cycles. Giorgi suggested that any post-election dip would likely present a buying opportunity, aligning with a long-term bullish outlook rather than a short-term defensive posture.
Further bolstering this perspective, an analysis by Wells Fargo, as cited by Bloomberg, revealed a consistent pattern: the S&P 500 has historically risen in the 12 months following every postwar midterm election. This historical trend suggests that, over the medium to long term, the market tends to recover and advance irrespective of the specific political outcome.
The Enduring Resilience of Markets Amidst Political Flux
The apparent absence of a significant midterm-year market pullback is a key observation for many industry professionals. Shiraz Ahmed, Founder and Chief Executive Officer of Sartorial Wealth Inc. in Mississauga, articulated this sentiment, stating, "Honestly, less than people think. Going back to 1950, the S&P 500 has been higher a year after every single midterm, and it hasn’t much mattered which party won. What’s unusual this year is we never got the typical midterm-year pullback. Markets have had months to get comfortable with a Democratic House, so I’d be surprised if the result itself moves things much."
This viewpoint is echoed by Josh Sheluk, Chief Investment Officer at Verecan Capital Management Inc. in Halifax, who informed Wealth Professional that he has seen "zero" impact from political predictions on his investment decisions. He elaborated, "Many people will quote past statistics about what performs well under different political alignments, but our view is that these past stats are not predictive and, even if they were, are not reliable enough to drive investment decisions."
James Learmonth, Co-Chief Investment Officer and Portfolio Manager at Harvest ETFs, provided a statistical backdrop to this observation. He detailed that over the 60 years preceding midterm elections, the S&P 500’s price returns were positive approximately 60% of the time over 12-month periods and about half the time over three- and six-month periods. Crucially, he noted that returns after the vote have been remarkably consistent, with positive outcomes occurring about 85% of the time over three months and in every six- and 12-month period observed.
Learmonth further commented, "There’s no guarantee that the same will be the case this time; the market has a laundry list of risks to contend with post-election, but historically markets have seemingly benefitted from greater clarity on the political front, despite the outcome of the election." This suggests that the resolution of political uncertainty, regardless of the specific outcome, often provides a tailwind for market performance.
Navigating Client Inquiries Amidst Election Fever
While the advisors themselves remain steadfast in their strategic approach, the demand for insights and guidance from clients is palpable. A survey conducted by UBS between September 4 and 11, 2026, involving investors with at least US$1 million in assets, revealed that 88% desired a better understanding of the midterm elections’ implications for their portfolios. Furthermore, 84% sought more guidance than usual from their advisors during an election year, as previously reported by Wealth Professional.
This indicates a significant client interest in the political landscape and its potential financial ramifications. However, the advisors’ role is not to predict outcomes but to manage client expectations and reinforce long-term investment discipline.
Philip Petursson, Chief Investment Strategist at IG Wealth Management, shared his firm’s approach. While they are making modest portfolio adjustments, these are not bets on the election results. Petursson highlighted a common seasonal pattern: "November and December tend to see equity rallies once uncertainty lifts." He offered a concise piece of advice to clients seeking to navigate the election’s impact: "Don’t overtrade it. Don’t overthink it. You can get the election right and the market wrong. That’s a pretty expensive way to discover that politics and stock prices aren’t the same thing."
Ahmed, when addressing client concerns about election-driven trading, redirects the conversation towards more tangible year-end financial planning strategies. He emphasizes opportunities such as tax-loss harvesting and maximizing unused contribution room, steering clients away from speculative pre-vote exits. Sheluk, drawing on past experiences, points to significant political surprises like Donald Trump’s two unexpected election victories and the Brexit referendum, none of which resulted in sustained negative market outcomes. Both advisors have previously provided analysis for Wealth Professional on broader asset allocation strategies, including the debate around diversifying away from U.S. assets based on valuation concerns.
Trade Reviews, Not Ballots, Pose Canadian Risk
For Canadian investors, the primary source of potential market disruption, according to Ahmed, lies not in the U.S. election outcome but in trade-related developments. He pointed to the mandatory joint review of the Canada-United States-Mexico Agreement (CUSMA) that occurred last July. Analyses by law firms McMillan and Cassels indicated that the United States declined to renew CUSMA in its current form at that review.
This decision triggered Article 34.7(4) of the agreement, initiating a transition to annual joint reviews until its eventual expiry on July 1, 2036. Ahmed explained the implications: "Every one of those reviews is a chance for things to get choppy for the TSX and the loonie. And with the market going into the vote close to record highs, there’s not a lot of room for disappointment." This highlights a specific Canadian concern tied to bilateral trade agreements, which can have a more direct and immediate impact on the Canadian economy and stock market than the broader U.S. political landscape.
Post-Election Focus: Economic Fundamentals Take Center Stage
Looking beyond the immediate election cycle, the advisors are focused on a range of macroeconomic factors that are expected to shape market performance in the coming months. These include persistent inflationary pressures, the sustainability of capital expenditures in high-growth sectors like artificial intelligence, and ongoing geopolitical tensions.
Learmonth identified inflationary pressure, the durability of AI capital spending, and trade and geopolitical tensions as key watchpoints. Despite these potential headwinds, he remains bullish on equities, citing the strength of large-cap U.S. earnings and a forward price-to-earnings ratio that is near its 10-year average. This suggests a belief in the underlying earning power of corporations and reasonable market valuations despite current uncertainties.
Sheluk’s list of concerns includes elevated equity and corporate bond valuations, earnings expectations, the resilience of economic growth, and persistent inflation. These factors represent a comprehensive view of the current economic environment, where high valuations might amplify the impact of any negative news.
Petursson prioritized earnings, inflation, and the direction of interest rates above any electoral outcomes. He indicated that his primary market indicator will be whether companies that exceed earnings expectations and subsequently raise their future guidance are rewarded by the market. This focus on corporate performance and the signaling power of management guidance underscores a commitment to fundamental analysis.
In essence, while the U.S. midterm elections provide a backdrop of political uncertainty, the consensus among these Canadian financial professionals is that long-term investment success hinges on disciplined portfolio management, a focus on economic fundamentals, and a healthy skepticism of market timing based on political events. The historical data, coupled with their professional experience, suggests that markets tend to absorb political shifts and continue their upward trajectory over time, with the resolution of uncertainty often acting as a catalyst for renewed growth. The real, and perhaps more immediate, risks for Canadian investors may lie in specific trade dynamics and the broader global economic environment, rather than the immediate outcome of the ballot box.
