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Insider trading on Capitol Hill?
Members of Congress are much better at picking stocks than the average investor, according to new research. Are they playing fair?
From 1985 to 2001, investments by members of the House of Representatives outperformed the average investor's returns by nearly 7 percent annually, according to a new study.
From 1985 to 2001, investments by members of the House of Representatives outperformed the average investor's returns by nearly 7 percent annually, according to a new study.
Wendy Connett/Robert Harding World Imagery/Corbis
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new study found that from 1985 to 2001, members of the House of Representatives made 6.8 percent more on their stock purchases and sales than the average investor. An earlier investigation by the same researchers found that senators also beat the market. The latest report, which was published in the journal Business and Politics, concludes that members of Congress were almost certainly relying on insider information to fatten their stock portfolios. Are lawmakers engaged in shady trading, or are they just unusually savvy investors?

This is corruption, pure and simple: There is no denying it now, says Vox Populi. "Congress is shamelessly crooked." And the most disgusting part of this is that it's perfectly legal, because members of Congress have exempted themselves from laws that send corporate executives to prison for doing the same thing — trading on insider knowledge for personal gain.
"Corrupt like a senator"

Wait, there is no direct proof of anything shady: The researchers have no specific evidence to back up their conclusions, says Seth Fiegerman at Minyanville. They're just assuming politicians are picking stocks based on inside information about the industries and companies they oversee. But maybe they really are just good investors. "If nothing else, next time you write a letter to your congressman, you may want to ask him for stock advice."
"Your congressman: A better investor than you?"

Still, congressmen should be regulated like bankers: Beating the market by 6.8 percent over so many years is "better than hedge-fund superstars" can do, says Randall W. Forsyth at Barron's. It defies credulity to suggest that everyone on Capitol Hill is that good. But don't worry, there is an "estimably logical" solution. Let "the same reporting requirements imposed on corporate insiders be placed on members of Congress. After all, being on Capitol Hill makes one an ultimate insider."
"Fire your hedge fund manager, hire your congressman"

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