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Willisms

« Trivia Tidbit of the Day: Part 921 -- Even Lean State Governments Can Cut. | WILLisms.com | Trivia Tidbit of the Day: Part 922 -- Energy Not Why Texas' Economy Is Outperforming Nation's. »

Trivia Tidbit of the Day: Part 921 -- Congressional Wealth Effect In 2010.

When Congress Is In Session, Stocks Perform Worse-

Interesting data:

congressionalwealtheffect2010.gif
2010 was a good year for the Congressional Effect Fund. CEFFX finished the year up 15.20% as compared to the S&P 500, which was up 15.06%. Equally important, because we were only in the market when Congress was out of session, this performance was achieved by taking much less risk than the broad market. Using monthly volatility to calculate an annual risk, last year CEFFX had a standard deviation of 10.70% as compared to 19.30% for the S&P 500 Index.

This same comparison shows in our longer term numbers too. From inception through the end of 2010, CEFFX had an annualized return of 2.88% while the S&P 500 Index had an annualized loss of -1.65%. During this period, CEFFX had an annualized Standard Deviation of 10.51% as compared to the S&P 500 which had and annualized Standard Deviation of 23.02%. In other words, since inception, investors in our fund had less than half the annual risk of the broadly diversified S&P 500 Index.

2010 was not really a banner year for the Congressional Wealth Effect, since the market fared somewhat well, but the longer term picture definitely still indicates that Congress destroys wealth by its very existence. Being in session means stocks will perform worse on those days, generally speaking.

UPDATE:

Old posts on this phenomenon:
"Congress Destroys Wealth"
"Congress Ruins America"
"Congress Ruins America"
"Unchecked Congressional Power Bad For America"


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Previous Trivia Tidbit: Cuts Aren't Terrible.

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Posted by Will Franklin · 8 February 2011 07:48 PM

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