Forget Your Broker, Call Your Senator

money, money, money In the first study of its kind, Georgia State University professor Alan Ziobrowski found that United States senators beat the stock market annually by 12 percent.

That is an impressive performance, as fund managers are thought to have the Midas touch if they regularly outperform by about 3 percent, and even hedge funds – which charge steep fees for performance – are now on average only 6 percent better than the market.

The academics who conducted the study looked at 6 000 stock transactions made by senators between 1993 and 1998. They noted that the senators did an especially good job of picking up stocks at just the right time – their buys were typically flat before they bought them, but beat the market by 30 percent, on average, in the year after.

However, it seems the senators might have been given a helping hand. Alan Ziobrowski, a professor at Georgia State University, and his colleagues concluded that at least some senators must have been trading “based on information that is unavailable to the public”.

Source: [Business Report]

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