Editor’s Note: This article was written on October 19, 2026, ahead of Israel's Knesset election on October 27 and the U.S. midterm elections on November 3. Market figures reflect research available at the time of writing. Genesis BH is nonpartisan and takes no position on any party or candidate. Our aim is to help members think clearly about markets, not to comment on politics.
In the space of eight days, two of the democracies that matter most to our members go to the polls. Israelis vote for the 26th Knesset on October 27, and Americans head to the midterms on November 3. For an investor community that lives between Miami and Tel Aviv, that is a lot of headlines, a lot of opinions and, understandably, a lot of questions. The most common one we hear: Should I be doing something with my investments before the votes are counted? History offers a surprisingly calm answer. Elections move markets, but rarely in the way the noise suggests, and almost never for as long as the noise lasts.
Markets don't vote for a party. They vote for certainty.
Israel: the market prices the deadlock before the vote
This year's Knesset election is unusual on its own terms. It is the first time since 1988 that a Knesset has served its full four-year term, and official results are expected around November 4. Polls describe a race too close to call. The Tel Aviv Stock Exchange's own research unit recently looked at the ten Israeli elections since 2003 and found a clear pattern:
- Before inconclusive elections, the TA-125 index fell by an average of about 5.3% over the preceding three months.
- Before elections that produced a stable government, the decline averaged just 0.2%.
- Within roughly five months after the vote, returns in the two scenarios were almost identical.
In other words, the market does its worrying in advance. Local stocks slipped in early October and underperformed global markets, which TASE economists read as investors bracing for a possible stalemate and even another round of voting. By election day, much of that risk is already in the price.
Longer-term research points the same way. Studies covering more than 60 years of Israeli elections have found that stock returns were, on average, higher in the period after elections than before them. And Israel's market has shown remarkable resilience through far bigger shocks than a ballot: in the Hebrew year that just ended, the TA-35 gained roughly 40%, well ahead of the S&P 500.
Israeli investors also have a particular reason not to over-read political drama. Since 1999 the country has held more than ten general elections, including four in two years. Many local market veterans have long argued that the economy, led by its private and tech sectors, responds more to global markets, inflation and interest-rate decisions than to who sits in the Prime Minister's office.
The U.S. midterms: a weak year, then a strong one
On the American side, the pattern is just as well documented, and it has a twist.
- Midterm years have historically been the weakest of the four-year presidential cycle. BlackRock's analysis puts average midterm-year gains in the single digits, below both presidential-election years and non-election years.
- The 12 months after a midterm have been the strongest. Since 1874, the S&P 500 has risen in the year following 32 of the last 38 midterm elections, gaining about 14% on average.
- The turn often comes early. Markets have historically begun to rally around a month before Election Day, as polling gives investors a clearer sense of the likely outcome.
2026 has already broken the mold somewhat. Fidelity notes that U.S. stocks have held up this year despite worries about oil prices, tariffs and possible rate hikes. That is a useful reminder: the election calendar is one input, not a forecast. As Fidelity's strategists put it in plain terms, elections have been a supplementary driver of returns, not the core one.
Where elections actually matter
None of this means elections are irrelevant. They matter most not to the index, but to specific corners of a portfolio:
- Policy-sensitive sectors. Defense, energy, healthcare, financials and real estate can all react to expected shifts in budgets, regulation or taxation.
- Currency. For investors holding assets in both shekels and dollars, political uncertainty often shows up first in the exchange rate. A move in the shekel can matter as much to your real return as a move in the stock itself.
- Fiscal direction. Coalition agreements in Jerusalem and the balance of power in Washington shape deficits, defense spending and tax policy, which in turn shape interest rates.
- Deal timing. In private markets, some investors and founders prefer to wait until after a vote to sign. That can create short pauses in deal flow, and sometimes better entry points for those who are prepared.
A practical playbook for election season
1. Don't trade the headlines. The data in both countries suggests that the pre-election dip and the post-election recovery tend to cancel out within months. Selling into the noise often means locking in the worst part of the cycle.
2. Separate politics from policy. Ask what would actually change for a business or asset you hold, not which candidate you prefer.
3. Review your currency exposure. Cross-border investors should know how much of their portfolio is effectively a bet on the shekel-dollar rate.
4. Think in 12-month windows, not election nights. Historically, the year after the vote has been where the opportunity shows up.
5. Keep some dry powder. Volatility is uncomfortable, but for patient investors it is also where valuations become more attractive.
6. Talk it through. Elections are a natural moment to revisit allocation and goals with your advisors, calmly and on your own timeline.
The Genesis view
Our members sit at the intersection of two economies that have repeatedly shown they can absorb political turbulence and keep growing. Israel's innovation engine and America's depth of capital don't switch off on election day. The ballot box will decide who governs. It is far less likely to decide how your portfolio performs over the next five or ten years. That still comes down to the quality of the opportunities you choose, the discipline you bring and the partners you invest alongside. Genesis BH connects high-net-worth investors with curated opportunities across the U.S. and Israel. To learn more about membership, visit www.GenesisBH.net.
This article is for general information only and does not constitute investment, tax or legal advice. Past performance is not a guarantee of future results. Please consult your own professional advisors before making investment decisions.