This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Lame Duck Congress Bodes Poorly for Stocks

With a lame duck session set to begin, Singer says the fund will be either in cash, Treasuries or neutral (for dividends) when Congress is back in session. When Congress is out of session, the fund goes long the broader U.S. market through S&P 500 exchange traded funds.

The Congressional Effect Fund is small ($8 million in assets) and has a fast turnover rate due to the nature of the investment theme. Currently, it has a net asset value of $10.70 and a miniscule beta compared with the broad market, which is simply a reflection of Singer staying out of the stock market.

"We've had a very active Congress over the past few years, so they've been in session almost three-quarters of the time," Singer says. "Our performance hasn't suffered because we've been able to capture a lot of the upside in the market."

The mutual fund, which is up 15% in 2010 and ranks among the top 1% in performance and bottom 1% among risk, benefits from so-called relief rallies and uncertainly over legislation. Still, the fund trails the S&P 500 over three months by a wide margin.

"Whenever Congress is even considering legislation, the stocks of those industries come under pressure. Those sectors are often big enough to affect the entire market," he says. "Talk is not cheap. When they simply talk of reining in the insurers, we all lose wealth."

While some have called the Congressional Effect Fund a novelty, much like the Vice Fund (VICEX), Singer says his returns validate the investing style.

As with everything in the investing world, the Congressional Effect Fund is no sure bet. When Congress enacted tax cuts in 1997, including a cut to the capital-gains tax, the annualized average price increase on the days when Congress was in session was 59.5%, according to data collected by the Congressional Effect Fund. When Congress was out of session that year, there was an annualized average price loss of 4.6%.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $130.42 1.26%
FB $80.41 1.07%
GOOG $555.48 2.13%
TSLA $207.19 1.68%
YHOO $44.45 0.04%

Markets

DOW 18,214.42 -10.15 -0.06%
S&P 500 2,110.74 -3.12 -0.15%
NASDAQ 4,987.89 +20.7530 0.42%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs