2 replies to this topic

[Dave]

"Members of Congress tend to outperform the stock market with their personal investments."
article
"A new study by a group of professors reviewed 16,000 common stock transactions made by House members between 1985 and 2001. The results showed that these approximately 300 representatives beat the market by about 6 percent annually."

[monogodo]

It makes sense to me. To get elected to the US Congress takes money. That means that nearly everyone in Congress has a decent level of income/net worth. It stands to reason that they'd be good at making investment choices to keep or accrue that income/net worth.

I wouldn't trust the researchers at all. The fact that they even hinted that the House members' stock selection was due to special information shows me that they're biased. Now had they truly analyzed the transactions as to when the stock was bought/sold compared to when something good/bad happened with the stock, as well as what committees the House members are on that could be linked to the stock, maybe they'd have something.

Simply hinting that "these House members are privy to information the general public is not, and their stock choices outperform the average, therefore they're corrupt" is very bad science.

[Dave]

I agree that their conclusions are ambitious given the kind of evidence they researched, but that a 6% edge is unlikely compared to the math wizards at financial institutions who are unable to get these kinds of numbers is exactly the kind of inductive step one is inclined to take.

It's public knowledge which committee members get what in terms of campaign contributions from interested industries in the sectors they cover. Another small inductive step: supposing that insider info is 'donated' to them privately.