Every two years, Washington, D.C., gears up for a potential political pendulum swing, and with it, the markets brace for movement. According to Jeffrey Fratarcangeli, founder and CEO of Fratarcangeli Wealth Management, when it comes to your portfolio around midterm elections, it’s less about predicting winners and losers and more about managing emotion, liquidity and long-term focus.
“Any election year brings uncertainty, and uncertainty brings volatility,” Fratarcangeli says. “You cannot control how Washington moves, but you can control your discipline and your preparation.”
Below, Fratarcangeli outlines several key considerations for investors and wealth managers as another midterm election year approaches.
Stay Disciplined Through Volatile Moments
Markets historically dislike uncertainty, and midterm elections tend to amplify it. Shifts in party control, or even the potential for them, often spark short-term reactions.
“This cycle will likely bring elevated volatility,” Fratarcangeli says. “The margin in Congress is razor thin, and any change in control could lead to new investigations, new priorities or even gridlock. All of that fuels headlines and emotion.”
His advice is simple: do not let emotion dictate action.
“Take the emotion out as much as possible. Dollar-cost average into your portfolio, maintain your plan and stay the course,” he added. “The data show that the market’s long-term trajectory is rarely determined by who’s in charge of Congress.”
Maintain Liquidity to Capitalize on Opportunities
Periods of political and market uncertainty often create both risk and opportunity. Fratarcangeli emphasizes the importance of liquidity not just for protection but also for offense.
“Make sure you have discretionary liquidity,” he says. “That might mean raising cash early in the year so you’re positioned to layer it back in when volatility peaks.”
He notes that market swings tend to be most pronounced between February and mid-October, the period leading up to election day, when polls, policies and sentiment shift daily.
“Being able to buy during those dips is what separates reactive investors from strategic ones,” Fratarcangeli adds. “It is not about timing the market; it is about being prepared to take advantage of it.”
Keep Perspective on Policy and Tax Implications
While elections can influence fiscal direction, Fratarcangeli says most tax impacts are already baked in ahead of time.
“With the passing of the One Big Beautiful Bill Act, we already know what to expect in 2026 for taxes,” he explains. “For example, we know that deductions for charitable donations will phase out after 2025. That means higher earners may be better served by accelerating gifts in 2025 rather than waiting.”
Beyond that, he says the real risk is hesitation.
“Uncertainty tends to make people freeze to the point where they stop making decisions altogether,” Fratarcangeli says. “That stagnation can be more damaging than any change in tax code.”
Fratarcangeli Wealth Management focuses on proactive preparation, coordinating with accountants, attorneys and insurance professionals to ensure structures and liquidity remain aligned with any evolving policies.
Remember: Politics Don’t Drive Long-Term Market Performance
Headlines may dominate news cycles, but historical data shows that divided or unified governments have minimal long-term effect on market growth.
“Historically, we have seen the market perform within a fraction of a percent regardless of which party holds the majority,” Fratarcangeli says. “The fundamentals matter more than the politics.”
That perspective is at the core of his firm’s approach.
“At Fratarcangeli Wealth Management, we focus on what we can control, which includes diversification, liquidity, planning and staying grounded,” he explains. “The noise will always be there, especially in an election year. The discipline has to be stronger.”
In an Election Year, Focus on What You Can Control
Midterm elections may shift Washington’s balance of power, but they should not derail long-term wealth strategies.
“The investors who stay patient, keep liquidity and ignore the noise tend to come out stronger once the dust settles,” Fratarcangeli says. “Keep your plan intact, use volatility to your advantage, and do not let politics distract you from building lasting wealth.”
For more insight from Jeffrey, visit the Fratarcangeli Wealth Management YouTube Channel.
