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

Summary

The fact remains that 535 congressmen (or issues entrepreneurs, as some consider themselves) can routinely outperform Fidelity, Vanguard, Merrill Lynch, Goldman Sachs, Morgan Stanley, and most other financial professionals. The precise formulas under which they monetize their knowledge advantages and their influence—whether it be through extracting campaign donations, favors for friends, insider trading, or using them to drive issues that increase their popularity—will always be subject to change and avoiding bad appearances. One thing has been true for over 100 years, and it is going to be true for the foreseeable future: with 535 issues entrepreneurs fighting for the limelight, there will be a constant eruption of news and proposals that relentlessly try to alter the existing business plans of each sector of American industry. The trick is to understand that congressional dysfunction is the norm and that it is likely to be permanent and that very little can be done about it except to minimize its negative impact on your life and your investments, and to occasionally see if you can genuinely profit from congressional pathologies.