Publication

We examine stock portfolios held by members of Congress between 2004 and 2008. The average investor in Congress underperformed the market by 2-3% annually during this period, a fi nding that contrasts with earlier research showing uncanny timing in Congressional trades during the 1990s. Members invested disproportionately in local companies and campaign contributors, and these "political" investments outperformed the rest of their portfolios (local investments beat the market by 4% annually). Our fi ndings suggest that informational advantages enjoyed by Congressmen as investors arise primarily from their relationships with local companies, and that widespread concerns about corrupt and self-serving investing behavior in Congress have been misplaced.