This Market Signal Has Been 95% Accurate for Nearly 90 Years. What Investors Need to Do Now to be Ready
2026-09-26 11:30
•Geoffrey Seiler •The Motley Fool
•••• •• Axe Cap view
Why the Post-Midterm Rally Matters for South African Investors
The US midterm election cycle’s 95% success rate in driving S&P 500 gains offers a timely cue for rand investors.
The US stock market’s post-midterm rally is one of the most reliable signals in financial history, with a near 95% chance of positive returns over the next year. While this may sound purely stateside, it has meaningful implications for South African investors. The rand often shrugs off dollar strength when US equities gain traction, especially tech stocks like those in the Nasdaq. This year, companies with strong AI and tech fundamentals, such as Naspers and Prosus, should benefit as they hold significant stakes in global tech giants. Staying sidelined means missing out on this cyclical upswing. However, investors should watch the USD/ZAR rate closely because if the dollar rallies hard on hawkish Fed surprises, the local benefit could diminish. For now, broad exposure through large-cap counters tied to global tech offers a good balance. this is just our opinion and not financial advice
Buy or hold Naspers and Prosus to play the tech rebound linked to this US cycle. Hedge USD/ZAR risk if you have domestic-heavy exposure. Avoid outright rand carry trades until the Fed’s next move is clearer.
- Naspers
- Prosus
- USD/ZAR
- Unforeseen Fed rate hikes boosting USD/ZAR sharply
- US political developments derailing the midterm cycle norm
7/10
Historical data shows the S&P 500 has delivered positive returns 95% of the time in the 12 months following midterm elections since 1938, with year three of the presidential cycle averaging 14.5% annual returns. The article recommends investors stay invested through broad-based ETFs rather than sitting on the sidelines, citing the market's shift toward large tech companies with strong fundamentals and the transformative potential of AI technology.
Our take is based on reporting first published by The Motley Fool.