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05-25-2011, 10:05 PM   #1
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Maybe the dem party can open a hedge fund

With Ratremajerin [sp] behind bars, someone has got to stack the deck and it seems like the congressmen, democrats especially, are quite adept at it.

QuoteQuote:
A new academic study by four university researchers examined 16,000 common stock transactions made by 300 House representatives from 1985 to 2001.

They found what they call 'significant positive abnormal returns,' with portfolios based on congressional trades beating the market by about six per cent annually.

The report suggests, but does not conclude, it could have something to do with the ability members of Congress have to trade on non-public information.
QuoteQuote:
The study found some significant difference based on party membership and seniority, with the Democratic sample beating the market by nearly 9% annually, versus only about 2% annually for the Republican sample.
Congressmen get 'abnormally high returns' on their stocks, new report reveals | Mail Online

At least they kind of sort of pretend to police themselves
QuoteQuote:
A small group of Democrats has been trying since 2006 to officially prohibit members of Congress and their staffs from using non-public information to enrich their personal portfolios, the Huffington Post reports.

The Stop Trading on Congressional Knowledge (STOCK) Act was most recently re-introduced in March by Reps. Louise Slaughter (N.Y.) and Tim Walz (Minn.).

But it has not been heard from since.
To put those percentages into some perspective, during the 1985-2001 period the CAGR of the S&P 500 was 16.21% so they were pulling down 22%. If you had $1,000 at 16.21% that would turn into $11,000 while your average congressmen would walk away with $25,000. A democrat would actually bag $35,000 while a republican would come in with $15,000.

I always wondered how they could get so rich on a "public servant's" salary.


Last edited by mikemike; 05-25-2011 at 10:16 PM.
05-26-2011, 05:31 AM   #2
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QuoteOriginally posted by mikemike Quote

To put those percentages into some perspective, during the 1985-2001 period the CAGR of the S&P 500 was 16.21% so they were pulling down 22%. If you had $1,000 at 16.21% that would turn into $11,000 while your average congressmen would walk away with $25,000. A democrat would actually bag $35,000 while a republican would come in with $15,000.

I always wondered how they could get so rich on a "public servant's" salary.
Most that are rich come in rich. Millionaires Are Taking Over Congress | News | Money/Investing | Mainstreet

9% better than the S&P 500 doesn't say too much to me without a lot more info. My financial advisor has always had us in funds that did a lot better than the S&P 500. I'd worry more about the ones in both parties who get rich on a spouse who is a lobbyist.

Maybe the Dems in Congress are a little smarter than the average investor. Maybe smarter than the Republicans, too. The Republican return seems a bit low at 2% over S&P. They must not be buying those funds managed by billionaires.
05-26-2011, 06:05 AM   #3
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Are you complaining about Capitalism's winners and losers again??


to make REAL money you have to 1)swindle Medicare (see Florida gov.)
2)Win a race for gov of Florida and pass laws funneling patients to your (now owned by your wife) business holdings (see gov. of Florida)
What do you think his/her rate of return is????
05-26-2011, 06:37 AM   #4
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QuoteOriginally posted by GeneV Quote
9% better than the S&P 500 doesn't say too much to me without a lot more info. My financial advisor has always had us in funds that did a lot better than the S&P 500. I'd worry more about the ones in both parties who get rich on a spouse who is a lobbyist.
The article says that it is common stock transactions - not mutual funds or other types of assets. 22%, sustained over 16 years is Warren Buffett territory. And in order for Buffett to be credited with that you are talking about he is owning a lot of companies in his portfolio and is able to heavily influence their management.

QuoteOriginally posted by jeffkrol Quote
Are you complaining about Capitalism's winners and losers again??
I am complaining about the referees placing bets on the games they are officiating in.

Currently, if Boeing and Northrup are both bidding on a $20 Billion contract, members of congress might be know the successful bidder before it is announced. They can use that information to go buy stock in the winner and short the loser.

They are letting lobbyists write laws to benefit certain companies and are being presented with how it will benefit that company, they also see lobbyists trying to keep laws from being passed and they get presented with exactly how the law will hurt the company. So they know this information way before the market does. Like with the ACA, after that was passed AT&T took a $1 Billion charge because it affected the way they cover their retirees. Do you think that came as a surprise to ATT or to lawmakers? I do not.

05-26-2011, 07:08 AM   #5
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Neither of us has read the actual report, as opposed to the summary of it, but beating the market by an average of 6% doesn't tell me much. I would also note that the study was conducted by four researchers from rather conservative states, mostly from Newt country. That may or may not have anything to do with the selection of congresspersons and transactions. The person who seems to have headed this has been alleging for years that representatives are acting on inside information.

How many representatives sell their individual stocks upon taking office, even though they are not required? Junior members did better than senior members. That would seem to indicate that they are selling their stock early on (when they would have the least inside information?), but these "researchers" conclude it is because they have less money and need to turn a quick buck. Before speculating they are acting on inside information, a lot more information is needed.

It also seems that it was likely they had a good chance of discrediting congress either way. If they lost, they were stupid. If they won, they are corrupt.

Last edited by GeneV; 05-27-2011 at 06:59 AM.
05-27-2011, 06:27 AM   #6
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For all of us......................

How America's Unemployment Crisis Saved the Rich (Guest Post) | Benzinga.com

QuoteQuote:
CNBC's Jim Cramer provides insight into the counterintuitive link between a rotten economy and soaring asset prices: “We are and have been in the longest ‘bad news is good news' moment that I have ever come across in my 31 years of trading. That means the bad news keeps producing the low interest rates that make stocks, particularly stocks with decent dividend protection, more attractive than their fixed income alternatives.” In other words, the longer Ben Bernanke's policies fail to lower unemployment, the longer Wall Street enjoys a free ride.

Out-of-work Americans deserve more than unemployment checks – they deserve dividends. The rich would never have recovered without them.
How America's Unemployment Crisis Saved the Rich (Guest Post) | Benzinga.com
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