How Will the 2026 Midterm Elections Affect Your Investments?
Description:
Could the 2026 midterm elections impact your portfolio, or is the real risk how investors react to the headlines?
Political seasons often bring uncertainty, emotional decision-making, and nonstop media coverage that can tempt investors to make costly financial mistakes. In this episode, Darryl Lyons explains why election cycles create market anxiety, how political messaging influences investor behavior, and what history can teach us about staying disciplined during volatile times.
You’ll learn why reacting emotionally to elections has historically hurt long-term returns, how to filter out political noise, and three practical steps to protect both your financial future and your peace of mind.
Whether you’re concerned about the markets, the economy, or the upcoming election, this episode offers a thoughtful perspective on making smarter financial decisions when emotions run high.
In this episode:
• How the 2026 midterm elections could influence investor sentiment
• Why political headlines often trigger emotional investing
• The “Threat Protector” framework used in political messaging
• Historical stock market performance during election years
• Why staying invested often beats trying to time the market
• Three strategies to navigate election season without hurting your portfolio
For more financial insights and resources, visit paxfinancialgroup.com
This content is for informational and educational purposes only and should not be construed as investment advice or a recommendation to take any specific action. References to market performance or historical trends are illustrative and do not guarantee future results. Third-party resources are provided for additional perspective and do not reflect endorsements or predictions by Pax Financial Group.
Transcript:
I read a book called The Coming Generational Storm. You don’t need to read it. There’s all these apocalyptic books, stock market, apocalyptic books, and there’s usually a theme of the same writers, and eventually they get it right one year and then they become famous. That’s the that’s their game. You know, you start to learn about these fear mongers, and then you start to see themes and you start to recognize that, you know, a lot of it’s nonsense.
So when I talk about a storm, I’m not talking about like a generational storm. I’m just talking about, you know, hey, you need to get out. And the umbrella that I’m talking about, it’s not going to be revolutionary. This is Darryl Lyons, CEO and co-founder of Pax Financial Group, and you’re listening to pivot with Darryl Lyons, formerly retire in Texas.
So we’ve made that switch. We’re excited. This episode is about the midterms. And I tell you about midterms because it’s part of my responsibility. There’s you know, here I am and I see a little cloud coming and we’re in, you know, we’re months away as you’re if you’re listening, I’m recording at the end of June, but the midterms aren’t until November.
So you’re not really thinking about midterms yet. But it’s coming and there’s a cloud coming. And I’m going to warn you, get out your umbrella. But it’s not like you need Noah’s Ark, so don’t freak out. I read a book called Coming Generational Storm. You don’t need to read it, but there’s all these apocalyptic books. And in the stock market, apocalyptic books.
And then there’s usually a theme of the same writers, and eventually they get it right one year and then they become famous. That’s the that’s their game. But, you know, you start to learn about, you know, this, these fear mongers, and then you start to see themes and you start to recognize that, you know, a lot of it’s nonsense.
But so when I talk about a storm, I’m not talking about like a generational storm, I’m just talking about, you know, hey, you need to get your umbrella out. And the umbrella that I’m talking about, it’s not going to be revolutionary. It’s not going to like, you’re not going to be like, wow, that’s amazing insight. And I’m not saying I’m saving you.
I’m just saying I just need to give you just a heads up. I don’t want you to make some mistakes. So it’s just a lot of noise coming. You know, Georgia is a big state. I’ll get into a little bit of it. George is a big state. Is it John Ossof there. He’s something else. Mary Mark Kelly and Arizona.
Another big state to watch out for. Open seats in Michigan and New Hampshire. You can hear a lot about Maine. And then of course here in Texas, Paxton and Talarico. And you’re going to be asking yourself, it’s crazy. I mean I anyways, I, I don’t I actually this is the second recording in this episode because then I started going down in political tirade and I was like, are I don’t know if this will come across the right way.
So I hit delete on my on my phone. I was like, let me start over because I just don’t want to, you know, I don’t want to be like you. You probably know how I am politically and all of that. I, you know, I fit the profile and check the boxes and all that. But but I want to respect your unique life story too.
So I every episode I have to earn your trust. And so if I am misinterpreted about something politically I you don’t come back next time. And so I think it’s better for at least for where I’m at, to share politics with you in a way that I think is direct. I certainly would rather not beat around the bush, but also respecting your unique life story, because I don’t know where you come from.
You may derive to pretty, you may be digging your heels in in a position that I totally disagree with, but at the same time, I don’t know how you got there, and I don’t know your unique life story, and this isn’t the platform for me to unpack that. So for that reason, I just I just kind of tell you how I feel about it, and I try not to, I try not to step on toes or get people frustrated because I really want to earn your trust.
I’ve got, I got I would say this, I’ve got bigger fish to fry than, than try to win a political argument in a podcast in 20 minutes. So there you go. But yes, I do have opinions. And yes, sometimes they come out strongly, but most of the time I just I want to help you. But here’s the deal.
When you when you when you were dealing with this upcoming storm, you’re going to be asking yourself about do I vote character? Do I vote party? And I think you’ve got to ask yourself those questions now, because there are two different decision making processes. And yeah, I just saw leave it at that only because I have more content I want to cover.
The thing that frustrates me about these midterms, I think the beginning of my frustration. I’m just starting to get frustrated. I got to make sure I don’t get too frustrated. But, is to see a state like Texas and the amount of money that goes into messing with our heads from out of state. So all of the parties, you know, out of state people, billionaires and millionaires putting money in ads that some algorithm tries to catch me or my cell phone or my mailbox or my kids now and influence them, they’re not even in the state.
That’s frustrating to all of us. These outside groups, these national donors, these political action committees, and the degree of money they do, they put in our social media feeds is is just beyond ridiculous. They’ll be putting a lot in specific states like Georgia, like I mentioned, Georgia and Arizona and Maine and Texas to a lot of money will go in Texas.
But make no mistake.
They don’t like us. They don’t care about us. They just want our vote. And I say they. I’m not saying the politicians, I don’t know the politicians, but the people who are the. And I’m going to share why with you. Just a second. The people who are are, writing checks for these political ads. They don’t care.
They’re just sending money to try to influence us, to try to make us click, or maybe make us donate, or maybe make a share. Maybe just make us angry. If they really cared, I would think that the messaging would be different. If they really cared, I would think that they would play the game totally different. So I don’t really think they care about us.
Maybe you disagree. I think it’s just manipulation and and so and again, I’m not actually saying the politicians. I’m saying the people who are using money to manipulate our and influence us, I’d say manipulate. There’s a difference to manipulation and influence. And so then what they do. So this is important for you to know. So this this money flow is important because a lot of outside money is trying to influence the way we think and behave and click.
So that’s important for you to know. And you already know that it’s important for you to not to forget. Then here’s the other piece about it. Then the politicians, many of them will do something called the Threat Protector framework. So the money is flowing and then they then they design the message that we receive to be within this threat protector framework.
And here’s the here’s how it works. First, you identify or emphasize the threat. Second, you convince voters that the threat is urgent and it’s personal. Third, you argue that existing leaders are incapable of handling it and forth, as you would imagine. Present yourself or present the you know, the politician presents themselves as uniquely qualified to solve it. So like the world is on fire and I’m I’m the only one capable of of holding the hose.
And some of you guys might have heard the term McCarthyism in the 1950s. He was, Senator Joseph McCarthy. He was credited with this framework indirectly, because he would, tell the world that there was communists that had infiltrated the the United States political system. And so he he mentioned that, you know, there are hidden enemies there inside the system.
You should be afraid. And I’m the person that’s going to find the traitors. That was kind of his message. And so this framework was just a framework that many people have adopted, because the degree of influence it has to get people to, to do things. So the money is that does not care about us. The money flow that does not care about us only wants to put this, this framework in front of us.
Okay, so I’m still getting to the place where I’m going to tell you how to get how to work through this nonsense, because it’s coming. I mean, it’s coming your way. And with AI, still don’t know to what degree it’s going to hit us. So what do we do? So it’s again, money. Massive amounts of money with a manipulation manipulated framework.
Me, by the way, you say what you want, this is, you know, an insight into me. You already know this, but he is not a master at this. But this is his. His is his playbook 100%. So pay attention to Madame. This is his playbook of how he gets you to to support him. And I say he’s one of many, but that one is just really, like, clear to me when you hear him speak.
So the first thing I want you to do that’s coming up again, lots and lots of money with this specific framework coming at you that doesn’t care about you. Okay. I want to make sure that’s clear, but. But the first thing I want you to do is vote. I still believe in voting. I’m still. I fly my American flag every day.
I still believe in the country. Lots of family in the military. I know history, and so I love our country. So vote matters much more than even the vote. It’s just the the the acknowledgment of the right and the freedom that we have. So please don’t let exhaustion or cynicism keep you from the voting booth. So that’s the one thing I would say.
Just be thoughtful, be responsible and vote. So pretty easy okay. Number two, stay informed. But not to informed. You don’t need to follow every poll. You don’t need to follow every debate clip. You don’t need to read every headline designed to just raise your blood pressure. Just in fact, if you want, maybe you could consume politics and batches.
Maybe just Friday morning I’m going to catch up on politics or whatever. What specific day or time you can just kind of batch your politics. That’s probably a good idea. Or how about this? How about you commit to consuming politics and the equal amount of reading the Bible?
Like a lot of people read the Bible is like, what are you saying? That’s like most people don’t read the Bible. So this is even this is this is a nudge in the right direction. Okay. But why don’t you try that? Why don’t you try? Okay. If I’m a rebel, if I’m going to read politics for an hour, then I’ve got to read the Bible.
An hour. There’s a good challenge, Lisa, to offset each other. You know, the the blood pressure versus perspective, the outrage versus wisdom. You know, maybe that’ll offset a little bit. But at the end of the day, I think you’ll you’ll come far ahead. You know, it says the Bible is sharper than a two edged sword. It divides the soul and spirit.
So I think I think that’s a pretty I think that’s a pretty good move on your part. But yeah, I just don’t get caught up in the, in the noise and then find a strategy to get in front of the, the headline risk, because it’s going to hit your news feed a lot and you’re going to get frustrated.
And I hope you don’t just sever family relationships. I think that’s nonsense. And people who do it are really immature. But it it happens, by the way. Does that mean I’m not saying I’m immune to it? You know, I spent the whole thing setting up the podcast episode for this third thing, which was, to me, probably the most important thing I say.
Most important, it’s the perspective I take in a lot of people’s lives is that’s money. How how you how do you do money in these environments? So this is where it can get very expensive. And I want to the third thing I want you to do is not overreact to your investments stating the obvious here, but I want to navigate this real quick.
A lot of people think if the wrong party wins were doomed, that is. And and, you know, you’re going to see people on both sides say that. I mean, Glenn Beck says it every single time. And he is completely wrong all the time. So please understand that, and a lot of these guys are nobody really knows, like what’s going to happen nor how it’s going to impact the markets.
But let me give you a little taste of history, first of all, and I’m going to put this link to all this research. It’s not a lot of research, but it’s it’s the data that supports it because all the disclosures are there that this is not promissory, this is not indicative of the future. And you can’t invest directly in an index.
You’ve got to buy an ETF that replicates the index. That’s all the small print that you see in the disclosure stuff. So I will put that in in the podcast notes. But interestingly enough, the last two midterm election years, if you look at those 2018 and 2022 midterms, elect elections, both of them were negative for the stock market.
People lost money those years. So the last two now I like it’s kind of a strange thing when you when you look at history because you want to look back further. And if you look back further you’ll find that it’s not as bad. But the last two are pretty tough. And the reason I think the last two might have a little bit more waiting is because they better reflect the social media environment that we’re in and how much that influences behavior.
And so that’s why I was going to express the maybe the last 20 or 30 midterms, which is in fact, it’ll be in the research report. You can look at that. But the last 2 or 3 with the level of social media that we consume today, probably better reflects a potential outcome. With that being said, there’s historically never been a three consecutive negative midterm years.
So, I think the main thing that I would say to that is I don’t really know, frankly. I just know that the midterm years create a lot of nervousness because of that framework where people are talking about threats that really bother us. And they’ll they’ll start to talk about the artificial intelligence threat. They’ll start to talk about the war in Iran, and they’ll start talk about that K shape market that I’ve talked about before.
Of course, all things economics, which is really bottom line for most most elected officials is the it’s the economic stupid is what they say. But the threats will just be a prevalent headline and that will cause people to get nervous about their money. And then once they, they totally bought in because the money is influenced their brain, they bought into this candidate and that candidate doesn’t work out.
They react. And so this is just a byproduct. And for those that are smart to weather through that some people will be buyers. They’ll be like, you’re an idiot. This really won’t impact life. I’m glad you’re emotional. I’m going to go and buy the stock market because it’s on sale. That’s how the market works, and that’s usually the people that get really emotional about these things.
They lose money and the people who don’t, they win. So it’s pretty simple in that regard. But it’s just in the midst of it all in the noise. It’s kind of nerve wracking. So additional research that I think is important. And again, I’ll give you this because it’s not it’s no way, in fact a promissory or like you’ve seen before past performance not indicative of future returns.
But if you go in since 2013, if you had $100,000 invested in the S&P 500, the largest 500 companies 2013 again, I try not to use a lot of numbers in this podcast in podcast, but this one I want to make a point. 2013 to 2026, $100,000 invested would be worth almost 400,000 and be worth 398,000. Pretty good.
But if you would have just messed with your money because a political party was out of power, so you shifted like Republicans lost. So you moved out or in, Democrats lost or whatever. So you were always moving your money out during midterms because the political winds changed rather than having almost 400,000. If you were to just moved your money around when Republicans were favorable, then your 100,000, would it turn into 214,000 if you would have just done it when Democrats were favorable, your 100,000 would be worth 186.
Don’t get caught up in the difference between Republican and Democrat. It’s immaterial as far as I’m concerned. The main thing is, is you’re just much better off not messing with it and just leaving it alone. I will have more content once the midterms are done, and maybe even a few commentaries. Up until then. The main thing is, is this is your umbrella.
I’m giving you your umbrella now for what’s coming in. If you in the next months, millions of people’s money who do not care about you are going to send a message that’s well organized and they are going to try to get you to do several things, and you may in fact do those, and some of them are going to be detrimental to your health and detrimental to your wallet.
I’m giving you an umbrella for this storm, and I am telling you now three things you need to do. Vote. Put your political feeds in perspective and if possible, balance the political feeds with a biblical read. And three don’t mess with your money, emotions and money don’t mix. It’s like orange juice and and and in toothpaste. And it just tastes gross.
There’s your midterm formula. And remember you think different when you think long term. Have a great day.
This content is for informational and educational purposes only and should not be construed as investment advice or a recommendation to take any specific action. References to market performance or historical trends are illustrative and do not guarantee future results. Third-party resources are provided for additional perspective and do not reflect endorsements or predictions by Pax Financial Group.
Resources:
Midterm Elections and Stock Market Trends | BlackRock
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