Congress Can’t Beat The Market, Even When It Cheats
It’s often been said that if you want something done wrong, Congress is pretty reliably up to the task. At least, if that sounds like something that’s probably said a lot, or at least should be. It may come as somewhat of a consolation, then, that congressional representatives and their staff are as bad at handling their finances as they are at running our country.
A recent study publicized by Smart Money shows that the portfolios of congressional members trails the market by 2-3% per year. Nothing particularly surprising about that fact. After all, beating the market is extraordinarily difficult and most congressmen presumably aren’t intelligent enough to embrace indexing (the electorate appears to prefer electing unintelligent types).
But what shocked me when I read the above story is this: congressional members aren’t subject to insider trading laws!
Insider Trading Is Legal?
That’s right: insider trading is legal. Well, not if you’re Martha Stewart. But if you happen to sit on the world’s most powerful legislative body, with the realistic possibility of actually being able to effect wide-spread legislative change for the sole purpose of lining one’s own pockets, insider trading is perfectly legal.
Does that make sense to you?
Now I’m sure what Martha Stewart did was probably wrong. And some fat-cat somewhere probably had to fore-go a built-in spa for his Lear Jet as a result of his stock holdings declining a few percent. But really, aren’t we missing the forest for the trees here? The laws that prevent little Johnny from buying 20 shares of stock based on what he overheard in the executive bathroom do nothing to prevent Congress from blatantly manipulating the stock market!
Talk About A Conflict Of Interest
Okay, so maybe this little loophole has never hurt anybody. Maybe no senator has ever tried to sneak a provision in a infrastructure funding bill that would increase the value of his shares in some construction company a couple of percent (anybody buy that?). Maybe no congressman has ever given a no-bid contract to a publicly held company he owned stock in. But doesn’t the knowledge that this kind of thing is even possible kinda piss you off a little?
But yeah, even with the ability to blatantly cheat and get away with it, congress as a whole still can’t beat the market. Idiots.