New report reveals Congressmen enjoy suspiciously high returns on their stocks

Pin it

A new report from a team of four university researchers suggests that members of the House of Representatives are definitely just may be gaming the system when it comes to playing the stock market.

The research team looked at 16,000 common stock transactions executed by 300 House representatives between 1985 and 2001. What they found raised eyebrows, as congressional portfolios topped the market at a healthy six-percent annual rate. The term they used for this financial acumen was "significant positive abnormal returns." Now, our elected officials are intelligent people, but the report also implies that exploiting non-public information could also be a definite possible reason why Congresspersons enjoy such healthy returns year after year.

And Senators do even better. The same research team in a previous study discovered that the Senate makes the market its bitch outperforms the market by around ten-percent annually. Because something has to pay for the hookers and drugs kids' college educations, right? (I don't sound cynical, do I?) The researchers dressed up the elephant in the room with academicese:

"In the course of performing their normal duties, members of Congress have access to non-public information that could have a substantial impact on certain businesses, industries, or the economy as a whole. If used as the basis for common stock transactions, such information could yield significant personal trading profits."

And the pols can get away with not recusing themselves from potential conflicts of interest through the specious plausible reasoning that it "could result in the disenfranchisement of a member's entire constituency on particular issues." Interestingly, Democrats were found to beat the market by almost nine-percent annually, while Republican portfolios were much less lucrative at only two-percent annually. And it turns out that, when it comes to getting theirs, freshmen members of Congress put senior members to shame, presumably because their financial situations aren't as stable, and thus their eyes get bigger when confronted with the opportunity to capitalize on insider knowledge main chance.