Congresspeople regularly outperform the market with their investment which is called "insider trading" and is forbidden for anyone else but them. I'm not saying that's the biggest issue with them, but that was what came to my mind first.
Congress folk are highly likely to have an investment professional managing their money, who usually outperform “the market” (whatever that means, considering most don’t benchmark S&P for obvious reasons).
What I really don’t get is that most insider trades make less than 70k before going to jail and even with inside information, a large percentage of insider trades don’t make money (but you still go to jail). Yet folks think it’s some kind of cheat code.
Folks need to stop reading WSB.
The laws are literally different for them: https://www.nbcnews.com/politics/congress/it-illegal-lawmake...
SEC, that prosecutes insider trading, is a civil regulatory body and cannot send people to jail, which the article mentions for some odd reason. And I’d put the odds at 100:1 that any prosecutor in the SEC would love to go after a Congress person to further their career.
Lastly, not sure most are aware, insider trading is usually spotted by SECs internal AI/algo that is connected to all brokers, clearing houses, etc. they are very good at finding folks.
Edit: another thing that is missing from this discussion is the SEC awards a portion of the proceeds to the whistleblower of any case. I just can’t believe no one ratted out a Congress member for retirement money and all members are security masterminds.
Have you considered the selection bias going on as an alternative explanation. Maybe the people with the competence and skills to get to Congress are just smarter than the average person with an investment account.
Also, there is a law prohibiting senators from trading on insider information, which kinda goes against your whole point.
https://www.congress.gov/112/plaws/publ105/PLAW-112publ105.h...
It’s a lot easier to match patterns in a db vs. real life crime.
But more to the point, you're wrong here and we know you to be wrong because otherwise white collar crime wouldn't exist, but it does.
There's nothing about being a Congressperson that lends itself better to the kinds of knowledge or intelligence that would increase the chances of betting well on the stock market...
...except the knowledge that comes from a) knowing what legislation will be ahead of time, and b) getting "paid" in insider knowledge from companies that want favorable treatment. (And possibly other kinds of insider-trading-type knowledge; I'm not particularly familiar with the specific methods they use.)
How do you know that? Their outcomes indicate otherwise.
They're clearly in some regards quite exceptional people.
In any case. I'm not saying there is no insider trading going on in Congress. After all, there are hundreds of representatives. Of course some are greedy idiots, and some even criminals. But the majority, and I believe thats a large majority, are honest people who care about the people they represent.
This is assuming the consequent.
There are two possible explanations being proposed for the observed outcome "Congresspeople do better than average at the stock market."
I am proposing the explanation "they are engaging in insider trading," and proposing evidence to support that.
You are proposing the explanation "they're just better at it", and giving as evidence solely the outcome we are attempting to explain. It's circular.
A congress person is able to constantly make decisions with imperfect information and be successful doing it, one can imagine that skill could give them an edge when trading.
But the reason I don't agree with it is because they're using 3rd part managers. It's far more likely that they're advising.
However, the way to put this to bed is to compare their accounts with those of others being managed by the same team. do they out-perform, under-perform, or roughly match those other accounts? There's your answer.