If you're over 35 years old you probably know this fact: that when the politicians hightail it out of Washington for one of their recesses the markets do well. When they're in Washington taxing and legislating the markets do poorly. Read the article below.
With Congress out of session for its August recess, one innovative fund manager is busy making money for clients who share his view that an inactive government is good for the stock market. Armed with data and a successful track record, Eric Singer is using his unique strategy to make profits and a point about avoiding the most dangerous element in any investment decision: political risk.
Singer’s Congressional Effect Fund takes its name from the phenomenon he helped prove: when Congress acts, markets suffer. In 1992 while working for a New York investment firm, Singer noticed a recurring pattern of exceptional stock performance. The “January effect,” was followed by stock market “rallies” during the summer, at Thanksgiving and Christmas. It occurred to him that in each boom period Congress was out of session.
So, he looked at the data to see if there was a correlation. Going back to January 1, 1965, Singer studied the performance of the S&P 500 Index on days when at least one house of Congress was in session compared to when neither house met for business. The results confirmed his intuition. On days when at least one house was in session, the S&P 500 had an average annualized price gain of +.94%. Alternatively, the Index gained +16.04% when neither house was in session.
The explanation is simple. Investors fear government action because it always involves change. Changes in rules and regulations cause uncertainty. That uncertainty leads to risk-averse behavior like banks reducing lending, landowners refusing to develop real estate and employers refusing to hire more staff. By driving wealth creators to the sidelines, government action makes the nation poorer.
Though intuitive to most business owners, the “congressional effect” is hardly conventional wisdom with financiers or academics. When Singer first published his findings a team of experts tried to disprove him.
They ended up making an even stronger case for Singer’s position.
In a 1997 study titled, “The Congressional Calendar and Stock Market Performance,” three university professors and a private financier concluded:
“Almost the entire advance in the market since 1897 corresponds to the periods when Congress is in recess. This is an impressive result, given that Congress is in recess about half as long as in session. Furthermore, average daily returns when Congress is not meeting are almost eight times greater than when Congress is in session. Throughout the year, cumulative returns during recess are thirteen times that experienced while Congress is in session.” ...READ "Investment Funds Show that Betting Against Congress is a Great way to Make Money" at Center for Individual Freedom.
Showing posts with label congress. Show all posts
Showing posts with label congress. Show all posts
Friday, September 03, 2010
Saturday, December 05, 2009
Government Get Out of Our Economy - Let Us Alone and We'll Fix it
I love the title of this article at The Wall Street Journal -
"A Jobs Sigh of Relief"
"A better stimulus plan: Have Congress adjourn until 2011" NOW THERE"S an IDEA!!!
...The news of a better job market couldn't have come at a better time politically given that Congress seems ready to waste more money on more government job creation. The same folks who planned the last stimulus now want to spend a few hundred billion on public works jobs, more aid to states, and another round job of jobless benefits. In some states, workers can now get paid for 18 months for not working. This will give many of them an incentive to postpone a job search even as their hiring prospects improve.
Meanwhile, the White House is thinking about paying home owners to weatherize their homes. Cash for caulkers, we suppose. Now, that'll put millions back to work.
The real message of the November report is that the job market is healing on its own, if Washington will simply let it happen. If Democrats want faster job creation by next November, they'll do nothing at all. Stop imposing new taxes on estates, payrolls, insurance, device makers, drug makers, small business, you name it. Start over on health care. Adjourn for the year, spend December with the family, come back in 2011. And watch Congress's approval rating rise. (Read the whole article at WSJ)
"A Jobs Sigh of Relief"
"A better stimulus plan: Have Congress adjourn until 2011" NOW THERE"S an IDEA!!!
...The news of a better job market couldn't have come at a better time politically given that Congress seems ready to waste more money on more government job creation. The same folks who planned the last stimulus now want to spend a few hundred billion on public works jobs, more aid to states, and another round job of jobless benefits. In some states, workers can now get paid for 18 months for not working. This will give many of them an incentive to postpone a job search even as their hiring prospects improve.
Meanwhile, the White House is thinking about paying home owners to weatherize their homes. Cash for caulkers, we suppose. Now, that'll put millions back to work.
The real message of the November report is that the job market is healing on its own, if Washington will simply let it happen. If Democrats want faster job creation by next November, they'll do nothing at all. Stop imposing new taxes on estates, payrolls, insurance, device makers, drug makers, small business, you name it. Start over on health care. Adjourn for the year, spend December with the family, come back in 2011. And watch Congress's approval rating rise. (Read the whole article at WSJ)
Wednesday, September 02, 2009
Of Lying Congresses and Presidents and Gullible Citizens
Red ink is all we will see for decades under this administration. This posting by Walter Williams is particularly critical today in light of the "health care" bill that is awaiting passage. The question is do most Americans realize what an obligation this will be in our old age and our children and their children. Any politician who makes promises should be looked at with a wary eye. They are usually lying. And Obama and this congress are no exception. Also as Mr. Williams points out there are 41% of Americans (121 million) who DO NOT PAY TAXES! These are Obama's prime constituencies. Now do you understand how high our taxes will rise?
President Obama and congressional supporters estimate that his health care plan will cost between $50 and $65 billion a year. Such cost estimates are lies whether they come from a Democratic president and Congress, or a Republican president and Congress... Let's check out their past dishonesty.
At its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee, along with President Johnson, estimated that Medicare would cost an inflation-adjusted $12 billion by 1990. In 1990, Medicare topped $107 billion. That's nine times Congress' prediction. Today's Medicare tab comes to $420 billion with no signs of leveling off. How much confidence can we have in any cost estimates by the White House or Congress?
Another part of the Medicare lie is found in Section 1801 of the 1965 Medicare Act that reads: "Nothing in this title shall be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine, or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer, or employee, or any institution, agency or person providing health care services." Ask your doctor or hospital whether this is true.
...Roughly 121 million Americans -- or 41 percent of the U.S. population -- are completely outside the federal income tax system. These people represent a natural constituency for big-spending politicians. Since they have no federal income tax obligation, what do they care about higher taxes or tax cuts?. (READ at CapMag)
President Obama and congressional supporters estimate that his health care plan will cost between $50 and $65 billion a year. Such cost estimates are lies whether they come from a Democratic president and Congress, or a Republican president and Congress... Let's check out their past dishonesty.
At its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee, along with President Johnson, estimated that Medicare would cost an inflation-adjusted $12 billion by 1990. In 1990, Medicare topped $107 billion. That's nine times Congress' prediction. Today's Medicare tab comes to $420 billion with no signs of leveling off. How much confidence can we have in any cost estimates by the White House or Congress?
Another part of the Medicare lie is found in Section 1801 of the 1965 Medicare Act that reads: "Nothing in this title shall be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine, or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer, or employee, or any institution, agency or person providing health care services." Ask your doctor or hospital whether this is true.
...Roughly 121 million Americans -- or 41 percent of the U.S. population -- are completely outside the federal income tax system. These people represent a natural constituency for big-spending politicians. Since they have no federal income tax obligation, what do they care about higher taxes or tax cuts?. (READ at CapMag)
Monday, January 26, 2009
John Adams' Opinion of Congress
In my many years, I have come to a conclusion
that one useless man is a shame,
two is a law firm, and
three or more is a congress."
- John Adams
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