August 9, 2010

ANY WAY TO MAKE THEM STAY HOME?:

Of babies and hammers (Mark Hulbert, 8/04/10, MarketWatch)

The stock market will get a major boost at the end of this week. That's when Congress' August recess begins, and it isn't scheduled to go back in session until after Labor Day.

What's that have to do with the market? Plenty, apparently. The stock market on average has performed much better when Congress was not in session.

Consider an academic study several years ago by professors Michael Ferguson of the University of Cincinnati and Hugh Douglas Witte of the University of Missouri at Columbia. Specifically, they found that "about 90% of the capital gains over the life of the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 10,699, +45.19, +0.42%) have come on days when Congress is out of session."

Specifically, according to the professors, the Dow between 1897 and 2004 produced an annualized return of 5.3% when Congress was out of session, in contrast to just 0.4% when it was in session.

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Posted by Orrin Judd at August 9, 2010 5:50 PM
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