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

Litigated Elections

Like resignations and modern-day impeachments, there is only one recent example of a litigated election, although there have been several close calls. In 1960, President Kennedy had 10 states where the margin of victory was less than 10,000 votes, including Illinois and Texas. In the aftermath of that close election, using former President Hoover as an intermediary, a meeting was arranged between Vice President Nixon and President-elect Kennedy. Nixon was offered the chance to play a prominent role in the Kennedy Administration, but he declined. After that meeting, it was clear that Nixon would not contest the election. In subsequent years, he would describe himself as “at peace” with the decision not to contest it. As can be seen from Table 10.1, in the lame duck session of 1960, the stock market rose at an annualized rate of 23.03 percent, slightly better than the historical average of those periods.

The only actually litigated election was the Bush/Gore election of 2000. In the event the state of Florida was subject to an election recount and numerous legal appeals to Florida courts, federal courts, and ultimately the United States Supreme Court. Because an election had never been litigated before, there was a great deal of uncertainty surrounding what the final outcome would be. From the date of the election, November 7, 2000, until the date that the Supreme Court made an administrative ruling indicating it was moving to take control of the case on December ...