When the Crowd Runs
Where to invest after the Blue Tsunami in the US elections: post-Trump-sweep investment advice. A violent day for AI stocks, a new Congress, and why the plan was built for exactly this week.
What happened
On Tuesday, voters gave Democrats control of both the House and the Senate, a wider sweep than most forecasts expected. Starting in January, Congress and the White House will be held by different parties.
Wednesday, markets cheered. The Dow rose 3%, its best day since April 2025. Thursday, the mood flipped. The S&P 500 fell 4.36% and the Nasdaq 5.52%, the worst day since April 2025. The Nasdaq closed in correction territory, more than 10% below the record it set last month. Chip stocks took the hardest hit: the semiconductor index fell more than 12%, its worst day since March 2020.
The trigger was AI. Investors fear that the new Congress, together with local opposition in key states, will tighten limits on new data centers. UBS strategists estimate that about 30% of the data center capacity expected by 2028 is now at risk. Fewer data centers means fewer chips, less power demand, and less spending across the whole AI supply chain.
Our read: this correction has been building for a while. AI stocks were priced for a future with no speed bumps. The election did not create the bubble. It was the last straw that reminded everyone speed bumps exist.
Built for exactly this day
In last week's column, I Want to Be Where the Money Is, we wrote that we don't chase trends and we don't over-concentrate. This week tested that. In the short run, our highs may trail the hottest trend. Our lows are not as deep either, and over a full cycle, that is where the race is won.
Thursday showed why. The damage was concentrated: the narrower and more AI-heavy the holding, the deeper the cut. A portfolio spread across sectors, company sizes, regions and bonds still felt the day, but it did not take the full hit from one crowded theme.
Not losing much money (or our minds) during a sharp sell-off is what lets us stay invested. Staying invested is what puts us in the room when the recovery starts, and recoveries rarely send an invitation.
There is simple math behind this. A 50% loss needs a 100% gain just to get back to even. A 25% loss needs 33%. Shallower lows are not a consolation prize. They are a head start.
Leverage turned a bad day into a disaster. SOXL, a popular 3x leveraged semiconductor fund, fell 38.7% on Thursday alone. It now sits about 86% below its June 22 peak, and the timing matters: Korean individual investors put nearly $4 billion into it in June and July, right around the top. In Thursday's session, their holdings lost over $2 billion. Getting back to even from that peak now takes a gain of more than 600%. These funds also reset daily, so in choppy markets they bleed value even when the underlying index goes nowhere. They are built for traders holding for hours, not investors holding for years. That is why they have never had a place in our portfolios, even as plenty of managers in Korea reached for them during the euphoria to juice returns.
Most individual investors do the opposite of patience. They buy late, after the story is on every screen, and sell after the crash, when the pain peaks. Then they watch the climb back from the sidelines. The steadier line never looks exciting at the top. It wins by not falling off the cliff, so it is still standing when the next climb begins.
Illustration of a common pattern, not actual market data or the performance of any portfolio. The steadier line gives up some of the peak and wins by staying invested through the full cycle.
What history says
Two patterns are worth knowing. Neither is a promise.
The year after a midterm has been good to investors. Since 1946, the S&P 500 rose in all 19 of the 12-month periods following a midterm through 2018, per Deutsche Bank. The 2022 midterm extended the streak: the index gained about 14% over the following year. Oxford Economics puts the average post-midterm gain since 1950 near 15%. The usual explanation is simple: markets hate not knowing more than they hate bad news, and an election ends the not knowing.
Divided government tends to mean predictable government. The new Congress still needs the President's signature to pass anything. Neither side can go to extremes if it wants a law on the books. The likely outcomes are moderate compromise or very little new legislation for two years. Either way, businesses can plan, and markets reward planning. RBC data since 1932 shows a split Congress averaging about 14% a year, versus about 10% when one party held the White House and both chambers.
Now the honest footnote, because you deserve the whole picture. The exact mix we are getting, a Republican president with a Democratic Congress, has the weakest average of any combination, around 5% a year in RBC's data. Look at what drives that number: only a handful of periods, including the 1973-74 oil shock and the 2008 financial crisis. One recession swings the whole average.
That is the real lesson. Who holds the gavel is a weak predictor. Earnings, interest rates and the economy move markets far more than party labels. Which is exactly why we don't trade on elections.
What we are doing
Less, on purpose. That is not inaction. It is the plan working.
When one part of a portfolio falls hard, it shrinks below its target weight. Rebalancing trims what held up and adds to what fell: selling a little of what is expensive and buying a little of what just went on sale, by rule, not by gut. Quality companies that were priced for perfection last month may become reasonably priced after a week like this one. Patient money gets to shop. Panicked money only gets to sell.
Most of the goals our clients are invested for are years, often decades, away. That time horizon is the asset that lets the recovery do its work. Our job in weeks like this is to bring you facts instead of headlines, and to avoid moves that feel smart in the moment but, in hindsight, were just following the crowd. When everyone loses their mind at the same time, keeping yours is the edge.
What this means for you
| When you hear | The panic says | The plan says |
|---|---|---|
| "Worst day since 2025" | Sell before it gets worse | Check the plan, not the price; rebalance if your mix has drifted |
| "AI is finished" | Dump everything tech | Own it at a deliberate size, unleveraged, inside a global mix |
| "Buy the dip with 3x" | Catch the rebound faster | A one-day trading tool, not a home for family wealth |
| "Congress will change everything" | Go to cash until it is clear | Divided government moves slowly; time in the market beats timing it |
The crowd runs together, in both directions. We would rather walk, and still be on the road when they stop to catch their breath.
If something in your own life has changed, like needing cash in the next year or two, call us. That is a real reason to talk. A scary headline is not. IPM Advisory serves Korean-American families across Maryland, Washington DC and Northern Virginia, in English and Korean.
By Genti Cici, CFP, CAIA, IPM Advisory. Published November 2026. For general information only. Not a recommendation to buy or sell any security. Leveraged and inverse funds can lose most or all of their value. Data as of November 5, 2026; figures may change.
