Need a prolific stock broker? Call your Congressional representative

Flopping Aces ^ | 05-26-11 | Mataharley

[Starman417]

While most of us suspected that Congressional members have an "in" to some easy money, it appears those ties between Congress and Wall Street run deeper and more intimate than most of us feared. A new study, "Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives", released this week in the Business and Politics journal, (part of the Berkeley Electronic Press) focused on the higher percentages of stock earnings by 300 House members as compared to private investors with no access to non public information. The jaw dropping results revealed abnormally consistent stock successes that, over a period of decades with even a modest market, could net the elite Congressional members millions in portfolio earnings.

From the Washington Times article today by Valerie Richardson:

“We find strong evidence that members of the House have some type of non-public information which they use for personal gain,” according to four academics who authored the study, “Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives.”

~~~

The professors reviewed more than 16,000 common stock transactions carried out by about 300 House members as revealed in the members’ financial-disclosure forms from 1985 to 2001.

In a 2004 study, the same professors found that U.S. senators also enjoy a “substantial information advantage” over the average investor — and even corporate bigwigs — when it comes to picking stocks. The latest study shows that members of the Senate outperform their House colleagues by an average of 30 points per month.

Considering the BAP's "mother ship" electronic publisher, the four authors - Alan J. Ziobrowski, Georgia State University; James W. Boyd, Lindenwood University; Ping Cheng, Florida Atlantic University; and Brigitte J. Ziobrowski, Augusta State University - must have found it even more quizzical that the gains between party lines of the House members also showed a notable percentage difference in profits. And it wasn't the GOP, most traditionally characterized as being in the pocket of Wall Street, who was coming out on top.

The Democratic subsample of lawmakers beat the market by 73 basis points per month, or 9 percent annually, versus 18 basis points per month, or 2 percent annually, for the Republican sample.

“Given the almost folkloric belief that Wall Street invariably favors Republicans, the superior performance of trades made by Democratic representatives may seem surprising,” the study authors said.

ouch....

Also blogging with the same bipartisan foul taste in the mouth is Townhall's Finance columnist, John Ransom. Ransom runs some calculations to put a figure on that percentage of basis points.

[PhilosopherStone1000]

Hmm... Cart/Horse? And the “surprise” that Dems are scummier than GOPers is only a surprise to naive lefties.

[Venturer]

Youi don’t pay out a million dollars in campaign funds for the salary a House member gets. Obama didnt get rich off a books about drunken father. Payoffs hidden and not so hidden

[scorchedearther]

I love watching the Fox Business Network and listening to the great folks on it.

Such as Neil Cavuto, Charles Payne, Steve Forbes, Ben Stein, Dagen McDowell, Elizabeth McDonald and many many others.

FBN is just as good as the FNC.

[Digger]

FBN is just as good as the FNC.

I'll say it FBN is better.