A 2004 study finds that United States senators outperformed the market by 12% per year versus the -1.4% underperformance of the average US household during the same period. Even corporate insiders paled in comparison at a 6% out-performance per annum. Do you think there was any insider knowledge that assisted these non-financially savvy senators? I am sure that a 12% return per year is quite the hefty supplement to their salaries and pensions. I wonder if that will keep a cap on capital gains taxes…
You can read the whole study here.
This is also why there has been a proposal to stop senators and congressmen from trading because it creates perverse legislative incentives. Professor Stephen M. Bainbridge has written a proposal called the “Stop Trading on Congressional Knowledge Act”. Download it here:
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