Younger investors are translating election jitters into trades far more than older cohorts. Among investors younger than 30, close to three in four said they either reworked their holdings before the November elections or were considering it.
That is more than quadruple the rate for baby boomers, where 17% reported making or weighing changes. Looking across the full sample, 40% said they had already tweaked their investments.
The Harris Poll for Nationwide in late summer canvassed more than 2,000 individual investors along with 500 financial professionals. In that same survey, a majority said the midterms are raising their stress levels, and roughly three quarters believe the result could have a meaningful impact on their long term financial plans.
Many Gen Z respondents are dialling down risk. About 24% shifted money toward safer or lower volatility choices ahead of the vote, versus 13% of boomers who did the same. Younger investors were also much more inclined to branch into new asset classes for diversification and to speak with an advisor about election related risks.
With under three weeks to go until the Nov. 3 midterms, the political landscape remains in flux. Republicans hold the White House and both chambers of Congress, while polls pointed to Democrats likely taking the House and possibly the Senate.
Advisers and strategists see a line between sensible housekeeping and moves driven by nerves. Nationwide's Investment Management Group's chief market strategist, Mark Hackett, said he was struck by how differently generations responded to election-driven anxiety. He pointed to experience as a key factor, noting boomers lived through the dot com bust and the global financial crisis and saw markets recover, while younger investors learned in a nonstop news and social media environment. "It feels lousy, but the market is much more resilient than people give it credit for," he said.
Of the 500-plus advisors and financial professionals polled by Nationwide, nearly two-thirds said the optimal election-year move was to stay put.
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Jason Lilly, who runs Tenere Wealth Advisors in Massachusetts, said he trimmed stocks for clients who would soon need cash for living costs or to satisfy mandatory withdrawals from tax deferred accounts. Outside those practical steps, his guidance is to hold steady as the weeks around the vote "are going to feel a little stormy." His take: "I wouldn't make major changes."
Wes Crill, a vice president at Dimensional Fund Advisors, underscored that many forces drive prices. Over longer stretches, he added, "no matter who was in the White House or Congress, the long term returns have been positive."
History offers a counterweight to pre election angst. Bloomberg's data show the S&P 500 has delivered a positive 12 month return after every midterm since 1950, with an average gain of 15% in those periods. That compares with a little over 10% for the index's long term average annual return.
One study from LPL Financial looking at 1950 through 2023 found stocks did best when Washington was divided. When the White House was held by a Republican and Congress was divided, the average return was close to 14%. Strategists caution that the sample sizes are small, so firm conclusions are hard to draw.
The economy tops the voter priority list, with more than eight in ten calling it very important, according to Pew Research Center. Growth continues, but inflation tied to higher healthcare and gasoline costs has weighed on confidence, which recently slumped to its weakest reading since 2014.
In plain English: younger investors are moving first, many advisors prefer patience, and the year after midterms has historically rewarded staying invested. For your portfolio, the tradeoff is between easing short term worry and participating in a pattern that has, more often than not, produced gains in the following 12 months.
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