Editore"s Note
Tilting at Windmills

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February 25, 2004
By: Kevin Drum

LIFE AT THE TOP....I saw this story earlier today about how well senators did in the stock market but didn't pay much attention to it. Sure, they did way better than us ordinary schmoes. And yeah, they even did a lot better than top corporate executives, beating the market by 12% compared to the execs' 5%.

But who knows? Senators are probably able to hire pretty good financial planners, aren't they? Maybe it's all completely innocent. But then there was this:

The Ziobrowski study notes that the politicians' timing of transactions is uncanny. Most stocks bought by senators had shown little movement before the purchase. But after the stock was bought, it outperformed the market by 28.6 per cent on average in the following calender year.

Returns on sell transactions are equally intriguing. Stocks sold by senators performed in line with the market the year following the sale.

Uncanny indeed! Maybe somebody should bring a class action suit against the entire senate. And quickly, before they pass some kind of tort reform bill that makes it impossible....

UPDATE: Mark Schmitt expresses some doubts about this study here.

Kevin Drum 8:56 PM Permalink | Trackbacks

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