One clever Portfolio Manager coined the phrase Congressional
Effect to account for the strategy of investing in the S&P 500
index fund when Congress is in recess and to put your money in
ultra safe money market securities when Congress is in
session.
He conducted an experiment over 252 trading days of which
Congress was in session for 150 to 180 of those days. He
found that every time there was talk about changing a law
or changing the rules of an industry sector, companies had
uncertainty and some of their business models changed.
He noted that September was the worst month for stocks and
it is the month that Congress is in session for the whole
month. Good performance was shown for the pre-Holiday periods
because he postulates that Congress is not in session.
This is not a long enough track record for me and I don't
like switching that often. Interesting theory though....
