The market effect of lawmaking
Wall Street investment banker Eric Singer’s Congressional Effect Fund has beat the S&P 500 since its debut in 2008.
“Congress subtracts value.” That is former Wall Street investment banker Eric Singer’s succinct view of Washington’s effect on the economy, said Amity Shlaes in Bloomberg.com. In 2008 Singer launched a mutual fund, the Congressional Effect Fund, with a simple strategy: Invest in the market only when Congress is away; take refuge in cash when lawmakers are in session. Singer’s theory that “the stock market will sink when legislators report to work” is historically sound, said Kathy M. Kristof in Kiplinger’s Personal Finance. Over the past 46 years, the market “advanced at an average annualized rate of just 0.9 percent when Congress was in session and 16.6 percent when it was on hiatus.” Singer’s fund has beat the S&P 500 since its launch, but you still may be wiser to “take your frustrations out at the voting booth.”