Historical research indicates that, more often than not, when Congress is in session there is a negative effect on equities markets (the “Congressional Effect”) due possibly to investor fear and uncertainty surrounding government action -- or possible action – as well as unintended adverse consequences on the stock market of Congressional legislative initiatives.

Congressional Effect Management has analyzed empirical data from January 1, 1965 through December 31, 2011 to determine the performance of the S&P 500 Index on days that Congress was “in session” (a day when either house of Congress meets for business) and “out of session” (a day when neither house meets).

For the period from January 1, 1965-December 31, 2011, according to the Library of Congress, Congress was in session each year an average of approximately 66% of eligible business days and out of session an average of approximately 34% of eligible business days. During this period, the S&P 500 had an average annualized price gain of +16.60% on days when Congress was not in session, and an average annualized price gain of +.72% on days when Congress was in session.

We believe that these gains are not coincidental, but rather reflect the cumulative effect of unintended adverse consequences on the U.S. stock market from anticipated and actual Congressional legislative initiatives. We refer to this effect as the “Congressional Effect”.




SMOOT -HAWLEY, 1930
NAFTA forerunner killed; great depression follows Read more...
RECONSTRUCTION FINANCE ACT, 1932
Government Expands; Market Contracts Read more...
EMERGENCY PRICE CONTROL ACT, 1942
Prices Fixed -- But Not In The Stock Market Read more...
PROPOSED HIGH YIELD DEBT TAX, 1987
1987 Crash Wiped Out 22% of Market's Value Read more...
HEALTH CARE TASK FORCE, 1993
Health Care Companies Get Sick; Lose $100B Read more...
REGULATION FAIR DISCLOSURE, 1999
Market Falls Off “Level Playing Field” Read more...
SARBANES OXLEY, 2002-03
Contributes to 20% Market Decline Read more...
ENERGY POLICY ACT, 2005
Ethanol Companies Flare Up, Crash & Burn Read more...

Should Congress stay on vacation?

Yes: 74.68%
No: 25.32%
Yes
No


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