A study entitled "Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives" show that stocks purchased either by members of the U.S. House of Representatives or U.S. Senate members on average beats the market 6% annually. Seems very interesting that politicians come down harshly on people in Wall-Street for insider trading yet no one ever talks about politicians using insider information. Wait a moment as I choke on irony.
You could say, "Well these are suppose to be smart people so of course they will beat the market!” I don't find this very compelling when a large majority of people in politics are lawyers and have never taken a finance class. Since politicians have probably the best network of connections (they are in the business of granting favors) they are able get access to information that no one else could get.
On the other hand if politicians really can outperform the market why don't they become fund managers and clean the clocks of nearly every mutual fund or hedge fund manager?
Study link:
http://www.bepress.com/bap/vol13/iss1/art4/
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