Are You Fed Up With Congress?

If you think politicians in Washington are ineffective and create uncertainty, you are not alone. This is reconfirmed with polls showing the approval rating of Congress at all time lows. Eric Singer, portfolio manager and founder of Congressional Effect Fund (CEFFX), takes it a step further. He contends that legislative bungling is so bad that the stock market will sink when legislators report to work and increase when they are on recess. Singer’s logic is that politicians create uncertainty and uncertainty creates market downturns.  Singer places the fund’s money in cash when lawmakers are in session, and uses futures contracts and exchange-traded funds to replicate the S&P 500 when they are on recess.

Since the fund’s inception in 2008, it has significantly outperformed the S&P 500. However, this may have to do more with keeping money in cash during a difficult time in the stock market than the fund’s strategy. Although investing in this gimmicky fund may make you feel better if you are dissatisfied with Congress, a diversified portfolio allocation along with a letter to your local representative may be more prudent advice.

Kevin McNab

This article is written by Kevin J. McNab. Kevin is President of ACE Wealth Partners, LLC and is a CFP®, ChFC®, and CRPC®. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by ACE Wealth Partners, LLC unless a client service agreement is in place. If you have any questions regarding this Blog Post, please Contact Us. Please read our website DISCLOSURE carefully for additional information.