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Surprise!: Congress' personal investments somehow manage to outperform the market
May 24, 2011 - by Donny Shaw
You know what’s sketchy? According to a new report, members of Congress who invest in the stock market consistently end up making abnormally high returns. Dan Froomkin reports:
Four university researchers examined 16,000 common stock transactions made by approximately 300 House representatives from 1985 to 2001, and found what they call “significant positive abnormal returns,” with portfolios based on congressional trades beating the market by about 6 percent annually.
What’s their secret? The report speculates, but does not conclude, it could have something to do with the ability members of Congress have to trade on non-public information or to vote their own pocketbooks — or both.
A study of senators by the same team of researchers five years ago found members of the higher chamber even better at beating the market — outperforming it by about 10 percent, an amount the academics said was “both economically large and statistically significant.”
What’s more likely here? Are members of Congress particularly brilliant? Or are they corrupt?
Congress has already made insider trading illegal for corporate leaders and anyone they may tip off. Perhaps it’s time for Congress to turn that law on themselves and pass the “Stop Trading on Congressional Knowledge Act,” which would prohibit members of Congress from trading stocks, bonds, commodities futures, swaps, etc. while “in possession of material nonpublic information.”
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Comments
Love the idea, all 4 co-sponsors democrats… well no surprises their(both the small number and lack of republicans). Dems should make this a 2012 campaign issue.
Definitely right luminous! It SHOULD be a campaign issue. Then again, it should come as no surprise that:
1.) Politicians are corrupt
2.) They don’t have to worry about following the same laws we do. Remember the Charlie Rangel incident where he was censured. And don’t forget about the Claire McCaskill incident, not to mention the White House aides among others
Surprise! opencongress left this part of the story out, is anyone surprised?
“The study found some significant difference based on party membership and seniority, with the Democratic sample beating the market by nearly 9% annually, versus only about 2% annually for the Republican sample.”
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Bernie Sanders proposed a bill 5 years ago that would have required all congressmen to put their money in a blind trust, but it got zero support.
Only a 100% turnover in congress — until we get a non-corrupt system — will get their attention.
Jack Lohman
http://MoneyedPoliticians.net
I still think the bill should be brought up on the campaign trail, but it’s unclear if it would help ANY party.
If I get invites for any of Orrin Hatch’s town halls(repubs are safe enough here that they don’t do debates and public town halls generally) I will ask him if he will support it, this assumes his isn’t slaughtered by some fascist nut job calling himself a tea partier in the primary *caugh*mike lee*caugh*.
I think this would fall under the argument of getting the money out of politics as well, as i have argued before!
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According to a new report, members of Congress who invest in the stock market consistently end up making abnormally high returns.Grant Gazelle Hunting | nubian ibex hunting
Surprise! open congress left this part of the story out, is anyone surprised?
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