Trade the Congressional Effect: How To Profit from Congress's Impact on the Stock Market

Trade the Congressional Effect: How To Profit from Congress's Impact on the Stock Market

Released October 2012
Publisher(s): Wiley
ISBN: 9781118362433

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Book description

An innovative investment approach that takes the actions of the U.S. Congress into consideration

Historical research indicates that, more often than not, when Congress is in session there is a negative effect on equities markets (the "Congressional Effect") due possibly to investor uncertainty surrounding government action or inaction as well as the unintended consequences of Congressional legislative initiatives on the stock market. Author Eric Singer, a financial professional with over twenty-five years of experience, is an expert on this phenomenon, and with this new book he shares his extensive insights with you.

Trade the Congressional Effect skillfully details how you can profit from Congress's impact on the stock market. Along the way, it puts this approach in perspective and gives you all the tools you'll need to profitably incorporate it into your investing endeavors. Singer walks you through the process of trading the Congressional Effect and provides practical guidance regarding the possible pitfalls and opportunities you'll face each step of the way.

  • Addresses why it is better to invest while Congress isn't in session

  • Reveals exactly what the Congressional Effect encompasses and why it occurs

  • Written by Eric Singer, one of the first people to publicly document the general effect of Congress on daily stock prices

    • Supported by over forty-five years of real world data, the Congressional Effect has proven profitable to those who know how to use it. This timely guide will show you exactly what it takes to make this phenomenon work for you.

    Table of contents

    1. Cover
    2. Wiley Global Finance
    3. Series Page
    4. Copyright
    5. Dedication
    6. Acknowledgments
    7. Introduction
      1. Our Damaged Economy
      2. Congress's Role in Wealth Destruction
      3. Summary
      4. Notes
    8. Chapter 1: What is the Congressional Effect?
      1. How Was the Congressional Effect Discovered?
      2. Early Returns Showing the Congressional Effect
      3. The Smoot-Hawley Act: The Mother of All Congressional Effects
      4. The Congressional Effect Data and Launching a Mutual Fund
      5. Summary
      6. Notes
    9. Chapter 2: The Congressional Effect and the Limits of Modern Portfolio Theory
      1. How MPT Has Been Used by Financial Advisers
      2. Formulas Distort Valuation if Inputs are not Free Market Inputs
      3. What Caused the Crash of 1987?
      4. The Magnitude of the Crash of 1987 Refutes MPT
      5. MPT Assumes All Daily Pricing Is Random, but the Congressional Effect Shows it is not
      6. Summary
      7. Notes
    10. Chapter 3: Congressmen as Issues Entrepreneurs
      1. The Time-Money-Vote Continuum: Congress as a Business
      2. Congressmen as Traders and Real Estate Entrepreneurs: Making Money Outside Their Day Gig
      3. Summary
      4. Notes
    11. Chapter 4: Behavioral Finance, the Stock Market, and Congressional Dysfunction
      1. Overview of Behavioral Finance Concepts
      2. Survey of Behavioral Finance Concepts
      3. Congress's Approach to Behavioral Finance
      4. Summary
      5. Notes
    12. Chapter 5: If Congress is Malfunction Junction, What's its Function?
      1. Economic Lifeblood: Investment Capital Formation, the Stock Market, and Congress
      2. Dodd-Frank Overview
      3. Health Care Reform
      4. Burning Coal and Other Energy Investors
      5. Summary
      6. Notes
    13. Chapter 6: Where Will Washington Strike Next?
      1. Where You Can Find Information
      2. How to Leverage This Glut of Information
      3. Summary
      4. Notes
    14. Chapter 7: Sidestepping Congress's Wealth Destruction with a Macro Approach
      1. 11,832 Data Points Support the Congressional Effect Theory
      2. Congress and the Tragedy of the Commons
      3. Adam Smith, Call Your Office!
      4. Summary
      5. Notes
    15. Chapter 8: Are Democrats or Republicans Better for Your Portfolio?
      1. Who Gets the Credit for the Bull Market in 1980?
      2. Unified Government Favors Nominal Returns
      3. Split Government Favors Real Returns
      4. Republican Congress vs. Democratic Congress
      5. Filibuster-Proof Majorities Hurt Returns
      6. Summary
      7. Notes
    16. Chapter 9: Leverging the Election Cycle
      1. The Presidential Cycle and Real Returns
      2. The 2012 Election and Beyond
      3. Notes
    17. Chapter 10: Are Lame Ducks, Impeachments, Resignations, Vetoes, and Litigated Elections Good for the Market?
      1. President Bill Clinton
      2. President Andrew Johnson
      3. Resignations
      4. Lame Duck Sessions
      5. Litigated Elections
      6. Vetoes
      7. Summary
      8. Note
    18. Chapter 11: More Ways to Dodge Congress's Stray Bullets
      1. Value Funds: Longer Time Horizons than Congress or the Somali Pirates
      2. Gold Funds: Avoiding Congressional Debasement
      3. Beyond Congress: International Funds
      4. Reducing Global Security Risk
      5. Summary
      6. Notes
    19. Chapter 12: “ThatGovernment Is Best that Governs Least”
      1. Prognosis: Increasingly Partisan Politics Is Not Good for the Market
      2. Conflicting Government Mandates Promote Market Instability
      3. The Cumulative Effect of Unintended Consequences is Congressional Wealth Destruction
      4. Congress's Dysfunctionality and the 2012 Election
      5. What Happens When Congress Does Not Know the Price?
      6. Congress Needs to Attract the Best Talent
      7. In Conclusion
      8. Notes
    20. About the Author
    21. Index

    Product information

    • Title: Trade the Congressional Effect: How To Profit from Congress's Impact on the Stock Market
    • Author(s):
    • Release date: October 2012
    • Publisher(s): Wiley
    • ISBN: 9781118362433