Why am I not surprised?

Multiple sources, but this one is pretty concise.

It turns out that the best time to make money on Wall Street is when Congress is out of session. In fact, according to Wall Street analyst Eric Singer, stocks do ten times better when Congress leaves town. (Good news! The House has gone on recess, and the Senate set to leave any day, and they won't be back until September!)

Whether you're a Republican or Democrat, this is a real eye-opener. We all hate to see our hard-earned taxpayer money wasted, or our business over-regulated. Now the evidence is in: Politicians are bad for Wall Street, and your pocketbook!

Singer revealed his shocking study at this year's FreedomFest in Las Vegas (www.freedomfestcom). He went back to 1963, "When we went off the silver standard" (as he puts it). He found that the S&P 500 Index has gone up only 1.6% a year during the time when Congress is in session... and a whopping 17.6% annually when Congress is in recess.

Economists Michael Ferguson, of the University of Cincinnati, and Hugh Douglas Witte, of the University of Missouri at Columbia, confirmed Singer's proposition.

They found that since 1897, 90% of the gains in the Dow Jones Industrial Average came on days when Congress was out of session. A dollar invested in 1897 with the strategy of going back to cash every time Congress met was worth $216 by 2000.

But an 1897-dollar invested on the reverse strategy was worth only $2. The correlation got worse after World War I, when Washington started playing a more activist role in taxing, regulating and inflating.

Another look at the same topic (and same research) comes from the woman who wrote "The Forgotten Man" (see my blog entry on same).

How to profit from the effect? To ensure your money is in stocks during all Congressional holidays and all in cash when Congress is in Washington, you'd have to go in or out of the market 15 or 20 times each year. Singer doesn't say how he's addressing such challenges, or share his results.

Still, the facts are there: If you applied his thesis from the end of 2000 through 2005, and stayed out of the S&P 500 while Congress was working, you earned close to 7 percent a year. If you stayed in the S&P 500 the whole time, the annual total return (including dividends) was less than 1 percent. There may be money in ideology, after all.

This satisfies my notion that the best federal Government is one where Congress and the President are from different parties and are largely antagonistic. This leads to "gridlock" in Government, which as far as I can tell is a good thing.