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Inside the Beltway: Who Does Congress Work for Anyway?

THE CORPORATE VALUE OF POLITICAL RHETORIC: Upbeat political speeches make the stock market go up. No, really. University of Iowa finance analyst Art Durnev analyzed the tone and content of 388 recent "state-of-the-state" addresses given by governors in all 50 states, then compared them in the aftermath to the performances of some 3,000 publicly traded stocks. The results: stocks "showed abnormally high returns" following optimistic messages.

"Our results strongly dispel the notion that political rhetoric is pure noise ignored by the market players, and we show that politicians possess valuable information not known in advance by investors and managers," says Mr. Durnev, who will present his findings to the American Economic Association in early January.

Take away message, then, to all political strategists: cobble together speeches that say things like "successful" and "pride," not "unemployment" or "bankrupt." Then see what happens.

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