Texas Went Blue. Markets Went Green, Then Red.

By Yohance Harrison, BFA™, CRPC® | November 2026

Texas is Blue and on Wednesday most portfolios were green. Only be back red on Thursday.

The Nasdaq-100 slid roughly 10% from its October 6 record in the final weeks of the month, briefly dipping into correction territory on October 30 as AI and semiconductor stocks sold off hard. Reuters estimated that more than $2 trillion in market value left the index during October. For diversified investors, the month told a different story. Small-cap stocks held their gains for the year, money rotated into other corners of the market, and broad portfolios absorbed the blow far better than the headlines suggested. Then, in the first week of November, a decisive midterm election handed markets something they had been missing: certainty, but only for a day. 

A Correction Telegraphed All Year

Fear found its footing again in the last week of October. Alphabet fell nearly 13% on October 29, its worst session since the company went public in 2004. One day later, Intel dropped close to 29% after a disappointing fourth-quarter forecast, its steepest decline since 1974. When two household names post their worst days in decades back to back, the news cycle starts to sound like a fire alarm.

The warnings had been in plain view for months. The European Central Bank has repeatedly flagged stretched AI valuations and heavy concentration in a handful of U.S. tech giants as a financial stability risk. The word ‘bubble’ was uttered constantly in the financial news. Are prices getting too far ahead of earnings?

Corrections are how markets reset expectations. Each one feels unprecedented from the inside, yet the historical record shows them to be a routine cost of owning stocks. Author and advisor’s advisor, Nick Murray, has long argued that, over time, optimism has proven to be the most accurate forecast an investor can make, and one rough month for semiconductors leaves that principle intact.

When the Headline and the Portfolio Disagree

The front page focused on technology. Meanwhile the Russell 2000, which tracks smaller U.S. companies, closed October 30 up about 13.3% for the year, ahead of both the S&P 500 (about 10.7%) and the Nasdaq Composite (about 9.4%).

Much of the money leaving technology found a new home in small-cap and value-oriented stocks, areas many investors had underweighted during the AI run. In a month like this one, diversification means some holdings lag while others advance, and the discipline lies in keeping both through the discomfort.

Behavioral finance has a name for the gap between the headline and the account balance: recency bias. The most recent, most dramatic event, like a 29% single-day drop, tends to feel like the whole story, so it crowds out the fuller picture sitting in your portfolio. One client stated last week that she added $2,000 to her account since July and her balance is the same on October 29th as it was on July 1. Of course I reassured her this is normal, but one may feel defeated when it looks like you are treading water. Another client asked, should we just take it all out and wait? What if this is like 1999?

Why Today Looks Different From 1999

The dot-com comparison is understandable, since large tech companies, elevated valuations, and concentrated enthusiasm all show up in both eras. The underlying businesses differ in an important way. Today's largest technology companies earn substantial profits from established products and customers, while many 1999 favorites had no earnings and, in some cases, no finished product.

October's selling targeted spending discipline. Alphabet poured more than $51 billion into data centers, servers, and chips in a single quarter, its free cash flow turned negative, and investors punished that trade-off despite growth in its cloud business. A market demanding discipline from profitable companies is a very different animal from a market discovering its favorites were never profitable at all.

Benjamin Graham, author of The Intelligent Investor (worth reading 2x), described the market as a voting machine in the short run and a weighing machine in the long run. October was a heavy voting month, and the weighing takes years.

The Market Votes for Stability

Speaking of voting, election night delivered a decisive result. Democrats won control of both the House and the Senate, a blue wave that left little doubt about the balance of power in the next Congress. Closer to home, Texas elected its first Democratic governor since 1995, and Democrats took the Texas House for the first time in more than two decades. On Wednesday, November 4, the Dow gained 1,569 points, about 3%, its best day after a midterm since 1982, and the S&P 500 rose 1.58%.

That rally rewarded stability more than any party. Markets dislike uncertainty, and this result delivered very little of it: no razor-thin ties, no hanging chads reminiscent of the 2000 Florida recount, and a prompt acceptance of the outcome by the President, which lowered the odds of a lengthy court fight. By Wednesday morning, Speaker Mike Johnson had announced he will not seek the minority leader post, and the House began turning toward the next Congress.

The celebration was short-lived. On Thursday the market went sour, as selling in chip and AI stocks returned with force, erased Wednesday's gains, and pushed the Nasdaq into correction territory. Some investors began weighing whether a Democratic Congress will take a harder line on the AI industry. A clean election settled one question for the market, while the debate over AI valuations remains wide open.

History adds some encouragement. Since 1950, the S&P 500 has finished higher 12 months later after all 19 midterm elections.

Midterm Year

S&P 500, 12 Months Later

1950

+17.5%

1954

+33.6%

1958

+12.1%

1962

+30.9%

1966

+16.3%

1970

+13.2%

1974

+20.5%

1978

+9.3%

1982

+22.3%

1986

+3.2%

1990

+29.1%

1994

+23.1%

1998

+24.1%

2002

+18.6%

2006

+12.4%

2010

+5.9%

2014

+3.0%

2018

+12.0%

2022

+8.3%

Average

+16.6%

Source: S&P 500 price return measured from the end-of-October close in each midterm year, TradingView data as reported by Yahoo Finance, October 2026. Index returns are unmanaged and do not reflect fees. Past performance does not guarantee future results.

A record like that is tempting to read as a promise. Behavioral finance calls this representativeness bias: we spot a familiar pattern and assume the next chapter will follow the same script. Nineteen elections make a small sample, and none of those years combined 5% Treasury yields, an AI spending reset, and a Fed raising rates into a growing economy. Nobody knows how the next 12 months will unfold, including me, and that uncertainty is exactly why your portfolio stays diversified across asset classes, built to hold up across a wide range of outcomes.

What to Do Right Now

Staying the course is an active decision, and often the hardest one to make while markets are falling. Nick Murray has observed that permanent loss in a diversified stock portfolio comes from investor behavior far more often than from the market itself. Selling during a selloff converts a temporary decline into a permanent one.

If your portfolio reflects your goals, your timeline, and your capacity for risk, October left your destination unchanged. The useful question to sit with is whether you still believe in where you are headed. If something in your life has shifted, such as a new job, a growing family, or a large expense on the horizon, you know how to reach us, and we will fold it into your plan. Otherwise, your plan is already built for months like this one.

This article is for educational purposes only and does not constitute individualized investment advice. Past performance does not guarantee future results. Indexes are unmanaged, do not reflect fees or expenses, and cannot be invested in directly. Advisory services are made available through Money Script Wealth Management, PLLC, a registered investment adviser. Registration does not imply a certain level of skill or training.

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