They mocked me on live TV.

Almost eight years ago to the day, I went on Yahoo Finance’s prime-time market show.

They invited me on to discuss an article I wrote that went viral. I made the case that stocks were likely to soar after the 2018 midterm elections.

If you remember, that was a difficult time for markets. We seemed to be teetering on the edge of a crash. The S&P 500 was suffering one of its worst months since the financial crisis.

The anchors didn’t want to hear my bullish message and tried to dismiss it as too simplistic. Stocks rose 12% in the year after my appearance… just as I predicted they would.

They never invited me back. Today, eight years later, the midterms are around the corner again.

Let me show you my updated research, which includes a perfect 21-for-21 indicator backed by more than 80 years of stock market history. It suggests now is the ideal time to buy quality stocks.

I’ll also share where we’re putting our money to work in Disruption Investor.

First, you should know that midterms have a profound effect on stocks regardless of which political party wins.

• My team and I studied every midterm election since WWII. Here’s what we found…

Since 1942, there have been 21 midterm elections… 

US stocks climbed higher in the next year after every single one. That’s 21 for 21!

I’ll repeat it because this is so important: For each of the past 21 midterms, stocks have always climbed higher a year later. Always. I bet you can’t find another stock market indicator with a perfect 100% track record over 80 years.

See the results for yourself here:

We’ve had every possible political combination in the past 80 years…

• A Republican president with a Democratic Congress.

• A Democratic president with a Republican Congress.

• A Republican president and Congress. 

• A Democratic president and Congress.

The market climbed higher every time.

• Stocks don’t just grind higher after a midterm election… They often surge.

Since 1942, stocks have jumped an average of 20.3% in the year after a midterm. For perspective, that’s double the average performance for stocks in all years.

We’re also entering the third year of a presidential term, which is historically the strongest year for stocks.

Take a look at this chart…

Source: SimianX

Historically, stocks have performed far better in the third year of a presidential term than in any other year.

• Now’s your chance to take advantage of the “midterm surge.”

Think of midterm elections like a thick fog covering markets…

Unable to see what’s coming, investors get nervous and act cautiously, just as they would when driving through thick fog.

Once the election concludes and the fog clears, investors regain confidence, and the market gets back on track. The opportunity is to buy quality companies while that uncertainty is still hanging over the market.

As I showed you, stocks have finished UP the year after every midterm election since WWII.

I expect a similar script will play out again this time.

There’s no guarantee, of course. But I’m not going to bet against a trend that’s worked for nearly a century.

• Which stocks should you own to take advantage of it?

At Disruption Investor, we focus on companies riding the biggest technological shifts of our lifetime. Our investment philosophy boils down to three words: Own the robots.

I don't mean C-3PO lookalikes. I mean “technology,” broadly defined.

In every era, the people who owned the new thing got rich. Cars in the 1920s. Computers in the 1950s. The internet in the 1990s. Today, it's artificial intelligence (AI).

AI is going to do more and more of the work in our economy. It'll drive cars, read scans, write code, and deliver packages.

That's great news for all of us as customers. And it matters for investors, because the more work machines do, the more the rewards flow to whoever owns the machines.

That's why our Disruption Investor portfolio includes companies like Nvidia (NVDA), which makes the chips that power AI. Micron Technology (MU), which supplies the memory those chips need. And Taiwan Semiconductor (TSM), which manufactures the world's most advanced chips. 

We also own many smaller companies helping build the backbone of the AI economy.

If you'd like to invest alongside us and discover the companies that will lead the AI revolution next year and beyond, click here.

Stephen McBride

Chief Analyst, RiskHedge