O'Reilly logo

Trade the Congressional Effect: How To Profit from Congress's Impact on the Stock Market by Eric T. Singer

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Early Returns Showing the Congressional Effect

I called in my assistant and asked her to look up the days when Congress had been in session and when they had not, and to compare S&P 500 prices on the in-session days and the out-of-session days for the past year. Just for kicks, I looked at how the S&P 500 (without taking dividends into account) performed on a daily basis over the past year (1991) whenever the Senate was shut. Allowing for some nuances of taking daily averages, the S&P was up about .00012 percent when the Senate was open and .0025 percent when it was closed, a difference on the order of 20 times! Moreover, the Senate was open twice as much as it was closed, so most of the gain for the year occurred only when the Senate was closed. The data were very compelling. The market did incredibly better when Congress was out of session. This seemed too good to be true. Certainly, 1991 must be an aberration. And maybe using the Senate alone was misleading. So, I needed more research.

I then asked her to go back five years. What I found surprised me. When I looked at the 1,261 trading days from 1987 through 1991, the market did five times better per day when Congress was not in session. From 1987 through 1991, the S&P 500 rose about .0010% on business days when Congress was closed, and just about .0002% when the legislators were in action. Now, this was a more modest difference, but over many more observations. The folklore surrounding the Super Bowl at that time was based ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required