"the Congressional Effect"

From 1965 through 2008, there were approximately 11,000 trading days. Market analyst Eric Singer calculates that the S&P rose 50 times higher on days when Congress was not in session than on days when it was.

And this political risk is intensifying.

From 2000 through 2008, in-session performance of the S&P is –12.4 percent. The out-of-session performance: +8.8 percent.

In other words, had you invested $10,000 only when Congress was in session from the beginning of 2000 through 2008, putting aside dividends, you'd have $4,615 today. Had you invested that same $10,000 only on days when Congress was on vacation, you'd have $13,416 today.

Singer is now moving from analyzing to acting: He has launched a fund that will invest only on days when Congress adjourns!

My concern about the impact of political risk on the markets prompted me to open a mutual fund called the Congressional Effect Fund.

It is very simple. When Congress is in session, the fund invests in Treasuries and other cash equivalents. When Congress is on vacation, it invests in instruments that track the S&P 500 Index.

The fund opened last May 23, and for 2008 it was down –2.2 percent, as compared with –34.2 percent for the S&P 500 Index from the same date, a difference of 32 percentage points. So far this year it is down less than 1 percent, while taking on less risk.

I have two goals for this fund. The first and primary goal is to do well for my investors. The second is to help people understand the impact government in general and Congress in particular can have on their investments.

If the net result of launching the fund is simply that Congress takes another three weeks of vacation a year, a grateful nation will be much better off.

For more information, visit here.