What Investors Should Know About IPOs, Portfolio Strategy, and Election Season

Explore a clear breakdown of 2026 IPOs, portfolio diversification, and midterm election impacts. Discover how new public companies, market volatility, and political cycles can influence your long-term investment strategy.

Last Edited by: LPL Research

Last Updated: June 18, 2026

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IN THIS ARTICLE:

There is a lot of activity across markets right now. New companies may soon go public, investment strategies are going through ups and downs, and election season is starting to heat up. Here is a simple breakdown of what it all means for you as an investor.

A New Group of Companies Ready to Go Public

After what’s been a slow period since 2021, the U.S. market could see a surge in new public companies in 2026. A stronger economic backdrop and renewed investor interest have reopened the door for companies to go public. An initial public offering, or IPO, is when a private company sells shares to the public for the first time. This allows investors to buy ownership in the company on a stock exchange.

What stands out about this upcoming group is its scale and influence. Some of these companies may be large enough to affect major stock indexes and attract attention tied to themes like artificial intelligence (AI). But IPOs can be unpredictable. While some become long-term winners, early performance often varies widely. The first year after a company goes public tends to be volatile, and many IPOs underperform even if a few big success stories lift the overall average of first year performance.

Why Investments Don't All Perform Together

Even strong investment strategies experience rough patches. In fact, most long-running funds have experienced at least one stretch of underperformance over time.

One way professionals manage this is by pairing different managers or strategies. The goal is simple: when one approach struggles, another may perform better. Think of it as another layer of diversification. Even within the same category, such as U.S. large cap stocks, different strategies can react differently to market conditions. By mixing investments that may not move in the same way, you can reduce the impact of any single weak period from a certain fund.

Midterm Elections and Market Volatility

As the 2026 midterm elections approach, investors should expect more headlines and potentially more market swings. Historically, markets tend to be more volatile during midterm years due to uncertainty about future policies and leadership.

Key questions this year include:

  • Which party will control Congress, especially the Senate
  • What policies could change around taxes, spending, or regulation
  • Whether any bipartisan legislation can move forward

Markets often react to uncertainty before the election. Once results are known, that uncertainty typically fades, and markets can stabilize.

Importantly, short-term market swings around elections are normal and long-term market performance has not consistently depended on which party is in control.

What This Means for You

Putting it all together:

Markets are constantly adapting to new information, whether that is a new company entering the public market, a strategy going through a stretch of underperformance, or a change in the political landscape.

  • Be patient when considering investment opportunities in newly public companies
  • Ups and downs in different parts of your portfolio are normal, but can potentially be stabilized by manager pairings
  • Do not let short-term headline noise change your long-term plan

A steady, balanced approach can help you stay on track no matter what the market is doing.

 

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DIVERSIFICATION, ELECTION SEASON, AND MARKET UNCERTAINTY FAQs

Diversification means spreading your investments across different types of assets so that you are not overly dependent on any single one. The goal is to reduce risk by making sure that not everything in your portfolio reacts the same way at the same time.

 

For example, you might own a mix of stocks and bonds, or different sectors like technology, healthcare, and energy.

 

Different investments respond differently to changes in the economy. When one part of your portfolio is down, another part may be stable or even rising.

 

Diversification does not eliminate risk, and it does not guarantee gains. However, it can help reduce the impact of large losses and create a more stable overall experience over time.

Uncertainty surrounding midterm elections can affect markets in the short-term, but their long-term impact is often more limited than many investors expect. Leading up to elections, markets tend to become more volatile because investors do not know what policies will be put in place for taxes, government spending, or industry regulation, to name a few.

 

This uncertainty can lead to some volatility in the market as new information comes out. However, once the election results are known, that uncertainty typically decreases and markets often settle.

 

History shows that markets have performed under many different political outcomes. Over time, factors like economic growth, company earnings, and interest rates tend to play a bigger role than which party is in power. 

Market uncertainty is a regular part of investing. It can be caused by many things, including economic changes, global events, or elections. While it may be tempting to react quickly, making sudden changes based on short term news can often do more harm than good.

 

A steadier approach usually works better, such as staying focused on your long-term goals, keeping a diversified portfolio, and avoiding frequent buying and selling based on headlines.

 

Markets have gone through many periods of uncertainty in the past and have continued to grow over time. While short term swings are common, having a clear plan and sticking to it can help you stay on track.

Disclosures

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. ​

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. ​

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. ​

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. ​

All investing involves risk, including possible loss of principal. ​

US Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. ​

The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The PE ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher PE ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower PE ratio. ​

Earnings per share (EPS) is the portion of a company’s profit allocated to each outstanding share of common stock. EPS serves as an indicator of a company’s profitability. Earnings per share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio. ​

Precious metal investing involves greater fluctuation and potential for losses.

The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.​

The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. Indexes are unmanaged and cannot be invested in directly.

The MSCI US Broad Market Index captures broad U.S. equity coverage. The index includes 3,204 constituents across large, mid, small and micro capitalizations, about 99% of the U.S. equity universe. Indexes are unmanaged and cannot be invested in directly.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price. Private credit carries certain risks — illiquidity, opacity, borrower concentration, and bespoke structures — that distinguish it from corporate bonds and bank loans and complicate its evaluation and oversight.

All index data from FactSet or Bloomberg.

This research material has been prepared by LPL Financial LLC.

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