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

Introduction

“Government is not reason, it is not eloquence. It is a force. Like fire it is a…dangerous servant and a fearful master, never for a moment should it be left to irresponsible action.”

— George Washington

“Government is not the solution to our problem…Government is the problem.”

— Ronald Reagan

Who would have thought in the 1990s that by the end of 2011 we Americans would have had a lost decade in which our investments were shattered, our equity in homes would disappear, our 401(k)s would be cut in half, and our stature as the preeminent economy of the world would increasingly be called into doubt? The convulsions of the past decade have resulted in economic and social setbacks of epic proportions. Our standard economic remedies have been tried and tried again, but now seem impotent against the giant new challenges facing us.

We have arrived at this surprisingly desperate moment after 100 years of slow but relentless growth in—and dysfunctionality of—government in general, and Congress in particular. Our politicians have engaged in magical thinking for so long that the magic is gone. They actually believe they can, like Harry Potter, speak incantations and create jobs and prosperity for everyone. But unlike Hollywood special effects, there are no economic or political spells that can dispel our troubles. We are in a mess caused by our own willful abandonment of our core principles. The remedies we used to believe in no longer work.

The public already knows something ...