Members of Congress Get Abnormally High Returns From Their Stocks

Members of the House of Representatives considerably outperform the stock market in their personal investments, according to a new academic study.

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."

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Huffington Post

I'm shocked! Shocked, I tell you!
http://1.bp.blogspot.com/__vjcuVchhnA/TPEoCPHerQI/AAAAAAAAC0A/7fWj62USfhA/s1600/Claude+Rains+-+casablanca145.jpeg

They cannot be above the law (provided the laws haven't been dismantled.)

And whose side are they on?

Having worked in the brokerage business for a while in the past I can speculate that prominent people like politicians don't get dumped on by brokers in order to clear out some inventory or to generate large commissions. Both of these practices are common. Of course brokerage houses are not always right either. I know of one broker who sold a lot of a certain stock because the house wanted to dump it and it later went from $2.00 to $70.00. When he sold it he was only looking at the commission.
If they were trading for their own account it's a different picture, but even then I think they get some pretty good advice. Of course being on the inside of regulation and other changes gives them a huge edge, not to mention future government contracts.
I think all Congresspeople should be barred from security trading in any way shape or form. Same with governors and state legislators, regulators and anyone else that has government power over finances. This is easily done with a blind trust.

They'd be able to charge a hefty commission. But, would/should it be legal?

I bet you could sell a lot of people on that..

:evilgrin:

I'd guess some of them, a large enough sample perhaps, would be happy to sell the info, in exchange for a cut of the profits.

They do better because of their higher intellect and shrewd business sense.