Skip Sauer of the Sports Economist blog sent me the link to this story:
US senators' personal stock portfolios outperformed the market by an average of 12 per cent a year in the five years to 1998, according to a new study. "The results clearly support the notion that members of the Senate trade with a substantial informational advantage over ordinary investors," says the author of the report, Professor Alan Ziobrowski of the Robinson College of Business at Georgia State University. ... "The results suggest that senators knew when to buy their common stocks and when to sell." First-time Senators did especially well, with their stocks outperforming by 20 per cent a year on average - a result that very few professional fund managers would be able to achieve. "It could be argued that the junior senators most recently came out of private industry, so may have better connections. Seniority was definitely a factor in returns," says Prof Ziobrowski. There was no difference in performance between Democrats and Republicans. ... The Ziobrowski study notes that the politicians' timing of transactions is uncanny. Most stocks bought by senators had shown little movement before the purchase. But after the stock was bought, it outperformed the market by 28.6 per cent on average in the following calender year.
One is reminded of Huey Long's admission that: "People say I steal. Well, all politicians steal." Anyway, remember this the next time some senator starts pontificating about corporate scandals.
