By the time Americans finished voting on November 3, four in ten investors had already acted on the result. Nationwide Retirement Institute research published October 13 found that 40% of surveyed US investors had changed their retirement savings or portfolio in anticipation of the midterms, including 15% who moved into more conservative or lower-risk investments and 13% who diversified into different asset classes or sectors.
The outcome arrived overnight. Democrats won control of both the House and the Senate, according to CBS News and CNN projections, and US stock futures recovered from early losses to point higher by about 5:30 a.m. Wednesday. The Tuesday session had been quiet: the S&P 500 rose 0.36% to 7,568.92, the Nasdaq Composite gained 0.8% to 25,372.01, and the S&P/TSX Composite slipped 0.75% to 35,532.28.
Loss Aversion Starts Before the Loss
Kahneman and Tversky, publishing in 1979, showed that people weigh a prospective loss more heavily than an equivalent gain. Tversky and Kahneman put the ratio at about 2.25 in their 1992 follow-up. An election is close to a perfect trigger for that asymmetry: a fixed date, two outcomes and a vivid story about what the losing side stands to lose.
The feeling does not wait for the result. Nationwide found that 56% of investors said the midterms were making them more anxious, and 75% believed the outcome could meaningfully affect their long-term financial plan. Nearly three-quarters, 73%, said they wanted guidance on the financial impacts of the midterms.
Morgan Stanley Wealth Management reported a similar mood in its Q4 Investor Pulse Survey of 953 US investors, conducted October 1 to 23. Bearish sentiment reached 42%, up four percentage points from the third quarter, and 48% were concerned about the effect of the midterms on the stock market.
Partisan Identity Colours the Forecast
The Nationwide data also shows how differently the same event is read. Some 76% of respondents expect the results to greatly affect the economy if the party they do not support wins. When their own party wins, 62% of Republican respondents expect no economic impact at all, against 46% of Democratic respondents.
That gap is motivated reasoning at work: the forecast follows identity rather than evidence. Nationwide notes that consumer sentiment moves sharply along party lines when control of government changes, even when underlying economic conditions have not materially shifted. Optimism tends to rise among supporters of the newly elected party while falling among supporters of the outgoing party. A portfolio change built on that forecast is a trade on feelings about the other side.
Anxiety was widespread, yet action was narrower: 56% felt more anxious about the midterms and 40% had already changed their holdings, while no single policy issue was named by more than 42% of respondents.
The survey covers US investors, not Canadian ones, and was published three weeks before the November 3 vote. Policy rows show the share of respondents naming each issue among the topics on their minds heading into November.
The Research Price Tag on Acting Early
Barber and Odean tracked the accounts of households at a large discount brokerage from 1991 to 1996 and published the results in the Journal of Finance in 2000 under the title Trading Is Hazardous to Your Wealth. Households that traded most earned 11.4% a year while the market returned 17.9%. The authors pointed to overconfidence as the driver of excessive trading.
Benartzi and Thaler described the mechanism in 1995 as myopic loss aversion: the more often investors evaluate a portfolio, the more losses they see, and the more heavily each one weighs. A news cycle built around election-night projections is an evaluation prompt delivered every few minutes.
Nationwide offers a counterweight. A Nationwide white paper found that annualized growth in S&P 500 earnings and in the index were nearly identical over the 20-year period analyzed. In the 2026 survey, 63% of financial professionals said not changing strategy in an election year is the best course, up from 52% in 2024.
The Canadian Read-Through Runs Through Trade
These surveys cover US investors. No comparable Canadian figure has been published this week, and none is assumed here. Canadian portfolios still carry the US equity exposure those respondents were reacting to, and election day showed how little a single date explains: the S&P 500 and Nasdaq rose while the TSX fell 0.75%, leaving it 2.0% below its October 28 close of 36,265.09.
Trade and tariff policy ranked second among US policy concerns at 36%, behind Social Security reform at 42%. For Canadian investors it is the channel through which Washington policy arrives most directly. CBS News reported that President Trump has said he plans to work with Democrats and will also use his veto powers as needed.
The behavioural test now moves from the vote to the days after it, when the anxiety that drove the first round of changes meets a result that no survey respondent could have known in advance.