Market update: What the US midterms mean for markets

In a nutshell:

• The situation: Worries about new AI rules in the US hit technology and chip stocks hardest. Most other sectors fell less.
• You invest with Selma? Then you can stay relaxed. Your portfolio isn't built on a handful of tech companies. It's spread worldwide across thousands of companies, bonds and precious metals, and Selma regularly brings it back into balance. You don't need to do anything.
• You don't invest with Selma yet? A dip is no reason to keep waiting. Start with money you won't need for the long term, invest larger amounts step by step, and rely on broad diversification rather than single trends.

What happened?

Election results can look very different depending on where you look. For many people the midterms were simply political news. Financial markets, however, look at elections from one angle only: what could the outcome mean for companies' future profits?

On Thursday, the Democrats won control of both chambers of the US Congress. Investors expect this could bring stricter rules for artificial intelligence and slow down the building of new data centres. As a result, the companies that had gained most from the AI boom fell sharply. Nvidia lost 9%, and chip makers like Micron and AMD fell 17% each. The tech-heavy Nasdaq dropped 5.5% in one day, and the broader S&P 500 fell 4.4%.

On Friday the selloff spread to Asia, especially to Japan, South Korea and Taiwan, which are home to many chip makers. In Europe, where tech plays a much smaller role, markets fell only around 1.5%.

Clouds, but no storm ☁️

A day like Thursday feels dramatic, but corrections like this are a normal part of investing. Since 1980, US stocks have fallen on average about 14% from their high at some point during the year. Even so, they ended the year higher in about three out of four years.

A few things are worth keeping in mind:

• This is mainly a tech story. Much of the drop came from a small group of very large US tech and chip companies. Experts see it partly as AI expectations adjusting to a more realistic pace, not as a sign that the economy is in trouble.
• The world is bigger than Silicon Valley. This year European stocks (Stoxx 600, about +10%) are actually ahead of US stocks (S&P 500, about +7%). Nobody knows in advance which market will lead next. That's why it pays to own them all.

With Selma? Here's why you can stay calm 💪

Broad diversification. Selma doesn't bet on single stocks or single trends. Your portfolio is spread across thousands of companies worldwide, plus bonds and, in many portfolios, precious metals (gold and silver stored in Switzerland). When one area has a tough week, the others help soften the impact.

Keeping your portfolio in balance. Markets move each of your investments differently, which can push your portfolio "out of balance". Selma regularly checks this and rebalances your portfolio back to its long-term strategy. Where needed, this happens with your next scheduled transactions, so there's no unnecessary trading.

Calm and steady. Your portfolio is based on your investor profile and your life situation, not on the news. Selma won't sell your investments because markets are falling. We stay focused on the long term, and we recommend you do the same.

What this means for you

If you already invest with Selma

Think long-term, not in headlines. The biggest risk in a market dip is usually not the dip itself but selling at the wrong moment. Investors who sell after a drop often miss the recovery that follows. If your goals and your life situation haven't changed, your investment plan doesn't need to change either.

Keep investing regularly. Regular investing is one of the simplest ways to get through bumpy markets. When prices are lower, your monthly deposit buys more. Over time, this lowers your average purchase price. Check in the app that your deposit plan is running.

Remember why you invest. You invest for your goals in 10, 15 or 20 years: your retirement, your freedom, your family. Over that time, a week like this one will most likely be just a small blip on the chart.

If you don't invest with Selma yet

Waiting for the right moment? Many people wait for "the perfect moment" to start investing, but nobody can reliably predict the bottom of a market. So the best moment isn't the lowest price. It's the moment you start with a plan.

How to start the right way. Invest money you won't need for the long term. For larger amounts, invest step by step over a few months to spread your entry points. And if you invest regularly, timing plays a much smaller role.

Investing in single stocks yourself? If a large part of your money is in a few tech or chip stocks, you've just seen how strongly single trends can swing. Broad diversification across countries, sectors and asset classes is the simplest way to get through weeks like this more calmly. That's exactly how Selma builds your portfolio.

👉 Start investing with Selma

👉 Questions? Ask Selma AI in the app, or have a look at our FAQ: Markets have been bumpy, should I do something?

Disclaimer: Past performance is not indicative of future performance.