The U.S. Congress Does ‘Abnormally’ Well in the Stock Market

Monopoly ManThis should be more troubling, but it feels like business as usual in Washington. Dan Foomkin writes on the Huffington Post:

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.”

Read More: Huffington Post

31 Comments on "The U.S. Congress Does ‘Abnormally’ Well in the Stock Market"

  1. DeepCough | May 25, 2011 at 4:34 am |

    Hmmmm…….isn’t the word “bribe” synonymous with the euphemism “abnormal return”?

  2. DeepCough | May 25, 2011 at 12:34 am |

    Hmmmm…….isn’t the word “bribe” synonymous with the euphemism “abnormal return”?

  3. maybe there should be a limit on how much they can invest in the stock market.

  4. maybe there should be a limit on how much they can invest in the stock market.

    • ArgosyJones | May 25, 2011 at 3:27 am |

      I think that’s right on the money:  congressmen and women should be restricted in their investments to index funds or other such proxies for the general wellbeing of the US economy.

    • There shouldn’t be any limit on how they invest in the market. They should only make public their transactions one hour before the transaction.

  5. Anonymous | May 25, 2011 at 5:40 am |

    You’re telling me that rich people with advanced knowledge of many things that effect the stock market tend to do better than those who do not have such advanced knowledge?  Inconceivable!!

    That’s almost as crazy as the headline I read recently about the Rapture not happening.

    “Breaking News!!!  Crazy Man Was Wrong About End Of World Happening Last Saturday.”

  6. hunter349 | May 25, 2011 at 1:40 am |

    You’re telling me that rich people with advanced knowledge of many things that effect the stock market tend to do better than those who do not have such advanced knowledge?  Inconceivable!!

    That’s almost as crazy as the headline I read recently about the Rapture not happening.

    “Breaking News!!!  Crazy Man Was Wrong About End Of World Happening Last Saturday.”

    • Grooveboss | May 25, 2011 at 7:25 am |

      hey he said october 21st is the real end. He said god just needs some more time to figure out who to place on the party bus

  7. ArgosyJones | May 25, 2011 at 7:27 am |

    I think that’s right on the money:  congressmen and women should be restricted in their investments to index funds or other such proxies for the general wellbeing of the US economy.

  8. Anonymous | May 25, 2011 at 10:36 am |

    Sounds like they might be doing a different form of insider trading: Buying/Selling stock before public policy is announced on a given issue.

  9. Sounds like they might be doing a different form of insider trading: Buying/Selling stock before public policy is announced on a given issue.

  10. IrishPotatoGun | May 25, 2011 at 10:49 am |

    You mean there is mob like tactics going on in the world of Business Gambling, Inconceivable!!!

  11. IrishPotatoGun | May 25, 2011 at 6:49 am |

    You mean there is mob like tactics going on in the world of Business Gambling, Inconceivable!!!

  12. Grooveboss | May 25, 2011 at 11:24 am |

    I will invest in the same stocks. Thanks for the insider information muahahahahahaha!!! Soon my death ray will be a reality….

  13. Grooveboss | May 25, 2011 at 7:24 am |

    I will invest in the same stocks. Thanks for the insider information muahahahahahaha!!! Soon my death ray will be a reality….

  14. Grooveboss | May 25, 2011 at 11:25 am |

    hey he said october 21st is the real end. He said god just needs some more time to figure out who to place on the party bus

  15. Mamagriff50 | May 25, 2011 at 3:04 pm |

    sounds like insider trading to me…jail ’em all!

  16. Mamagriff50 | May 25, 2011 at 11:04 am |

    sounds like insider trading to me…jail ’em all!

  17. Anonymous | May 25, 2011 at 3:18 pm |

    Ironically, this just reinforces the neoliberal meme that governance rightfully belongs to those whom the God of the Marketplace has deemed worthy of His largesse.

  18. Liam_McGonagle | May 25, 2011 at 11:18 am |

    Ironically, this just reinforces the neoliberal meme that governance rightfully belongs to those whom the God of the Marketplace has deemed worthy of His largesse.

  19. Anonymous | May 25, 2011 at 4:43 pm |

    It just adds contrast to the not so invisable line between the public and private sectors. Private businessmen become politicians and vice versa. It’s always been this way to some extent, although this fact is not spoken of
    much by these public-private fence-jumpers for obvious reasons.
    Attitudes, loyalties, and privilaged information do not fall away when businesmen turn politician… 

  20. GoodDoktorBad | May 25, 2011 at 12:43 pm |

    It just adds contrast to the not so invisable line between the public and private sectors. Private businessmen become politicians and vice versa. It’s always been this way to some extent, although this fact is not spoken of
    much by these public-private fence-jumpers for obvious reasons.
    Attitudes, loyalties, and privilaged information do not fall away when businesmen turn politician… 

  21. Wait, congress doesn’t mean legal insider trading?

  22. Wait, congress doesn’t mean legal insider trading?

  23. Tio Holtzman | May 25, 2011 at 8:01 pm |

    He who controls the spice controls the universe.

  24. Tio Holtzman | May 25, 2011 at 4:01 pm |

    He who controls the spice controls the universe.

  25. Tio Holtzman | May 25, 2011 at 4:01 pm |

    He who controls the spice controls the universe.

  26. Hadrian999 | May 26, 2011 at 12:21 am |

    Not shocked at all, congressmen have been using their position for corruption in business since the days of Alexander Hamilton

  27. Hadrian999 | May 25, 2011 at 8:21 pm |

    Not shocked at all, congressmen have been using their position for corruption in business since the days of Alexander Hamilton

  28. There shouldn’t be any limit on how they invest in the market. They should only make public their transactions one hour before the transaction.

Comments are closed.