How to Go to Congress and Become a Millionaire

A report from four scholars, Alan J Ziobrowski; James W Boyd, Ping Cheng; and Brigitte J. Ziobrowski, titled Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives, shows that between 1985 and 2001 members of Congress enjoyed a considerable advantage over members of the public in their investment returns.

The article was published by Berkeley Electronic Press and is a follow up to a similar study done on investments by US Senators.

“A previous study suggests that U.S. Senators trade common stock with a substantial informational advantage compared to ordinary investors and even corporate insiders,” says the introduction to the report. “We apply precisely the same methods to test for abnormal returns from the common stock investments of Members of the U.S. House of Representatives. We measure abnormal returns for more than 16,000 common stock transactions made by approximately 300 House delegates from 1985 to 2001. Consistent with the study of Senatorial trading activity, we find stocks purchased by Representatives also earn significant positive abnormal returns (albeit considerably smaller returns). A portfolio that mimics the purchases of House Members beats the market by 55 basis points per month (approximately 6% annually).”

Actually 12 times .55 percent comes out to 6.6 percent annually. That .6 percent return accounts for an additional $130,000 over a 17 year period.

So how lucrative can the 6.6 percent advantage be for Senators and Representatives?

A portfolio of $100,000 getting average stock market returns of 11 percent over a 17 year period would have grown to $589,000. If you were a member of the United States House of Representatives, though, enjoying the advantage that inside government information can bring you, your portfolio would have reached $1,573,000, according to an investment calculation I did using the finding from the study.

Assuming only average market returns for the next 20 years, a Representative would grow their portfolio to close to $13 million.

Under the same circumstances US Senator would have grown the portfolio to $18 million.

The conclusion of the study favors some sort of reporting mechanism similar to those imposed upon corporate insiders.

“We find strong evidence that Members of the House have some type of nonpublic information which they use for personal gain. That having been said, abnormal returns earned by Members of the House are substantially smaller than those earned by Senators during approximately the same time period. These smaller returns are due presumably to less influence and power held by the individual Members.”

While the sky wouldn’t fall if reporting requirements were imposed on members of Congress, the report misses the most obvious point.

Why do we have a federal government that can so substantially ensure winners and losers in investments and our economy? Isn't a system like that prone to corruption? Don't we witness the effects of that corruption in legislation like Obamacare, or the cadillac benefits offered public employees?

The report points out the even corporate insiders don’t enjoy the return advantages that members of Congress enjoy.

It’s one of the most damning indications yet that the scope of government has gotten wildly out of control.

It’s also another example of laws that Congress passes for the rest of us but won’t consider following.

That’s a practice that must end if we want to restore confidence in government.

We can only do that by making sure that government can no longer pick winners and losers in the stock market.

Excellent and brilliantly written. You’re right and it is a concept brought to us by our crypto-Marxists. We cannot trust the rich and we must hate them because they’re all political capitalists, no?

The truth is that political entrepreneurs thrive in a socialistic environment. Our Founders were rich guys and a smaller government loses the natural playground of corruption found in overreaching regulation and explosive budgets.

We’ve got to undo some of these Amendments and get back to Constitutional principles. I don’t know how to do it when AP American Government classes denigrate the Constitution and celebrate the Philosophy of Big Government. How do we breakthrough the government education monopoly and retrain Americans in basic, God-given liberty?

“Political Entrepreneurs,” is rich. Don’t be surprised if I plagiarize it!

I was brought up in a largely conservative atmosphere both at home and school. Still, I had a liberal period that lasted about two years. I was over it by age 20.

When so many young people are subjected to Marxist nonsense through their early twenties, it is a wonder there are so many Conservatives under age 50.

I don’t know what the answer is, though getting rid of the Dept of Education and turning the matter back to the States where it belongs should be a starting point.

This book taught me all I needed to know about political entrepreneurs in America:

http://www.amazon.com/Myth-Robber-Barons-Business-America/dp/0963020315

You’d love it and I share its ideas with everyone I meet.

The solution is vouchers and breaking teachers unions. If Wisconsin, Ohio, et al. win it’ll be the end. What conservatives have to recognize right now is that the battle is joined. Liberals are fighting for their lives and they’ll destroy America before they lose power.

Watch Obama’s policies and it’s proved out. Our goal is the opposite: victory while preserving the Union.

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