Last December, we made seven Grey Swan predictions for 2026.
Prediction #3 related to last night’s midterm election.
We forecast – against our personal wishes – that a socialist majority would control Congress:
With around 255 seats, against the 218 needed for a majority, Democrats handily won the House. And the Senate has flipped control as well, with Democrats winning seven seats, including one in Kansas – the first time since 1932.
Where do we go from here?
Amazingly, the outlook is bullish.
Our data shows that, following every midterm since 1950, stocks are up a year later – almost always by double digits. That’s 19 for 19.
But what about last night’s specific scenario, where a Republican president has to contend with a Democratic Congress?
We have seven prior data points where that plays out. And the data is just as strong:
The worst-performing one-year period, coming after the 1986 midterms, included the Crash of 1987. Without that one-day 21% decline, the market would have been up over 20%.
That said, we’ll have market pullbacks and corrections. It may feel like a grind at times. Or that the trend is broken and this time is different because of a more socialist makeup in today’s Democratic Party.
But we suspect that the “gridlock” scenario, where Trump can, as he puts it, become Mr. Veto, is strongly in play.
That bodes well for stocks. In this scenario, the only major legislation investors are likely to see would be enacted in the event of a crisis, much like the 2020 pandemic. But that’s a Grey Swan event for another day.
For now, markets are cleared for a year-end rally, and for a continued move higher in 2027.
~ Addison
P.S. Wall Street is about to face a problem. Its biggest institutional investors may soon be allowed to buy a stock they’ve been effectively locked out of. That changes on November 10, when the company could join the Nasdaq and open the door to as much as $42 billion in institutional buying.
And if I’m right, getting in before that flood of money arrives could be the moneymaking opportunity of a lifetime. In fact, he believes this investment could turn $10,000 into $200,000 by 2028 — a potential 20-bagger.
I called the dot-com bust and the housing crisis before Wall Street caught on. Now I see another massive opportunity taking shape, and I don’t want you watching from the sidelines.
That’s why I just released a special presentation yesterday explaining exactly how to position yourself before the November 10 deadline.
Click here to see what I recommend in this replay here.
