Are they just smarter?

While surfing the other day I ran into story that reported how your average common stock investor usually loses about 1% on their investments. Professional traders get about 3%. Insider traders trading on inside information get about 6% and US senators get a whopping 12% on their investments.

Now call me cynical, but given that you average senator sports the intelligence of few multi-cellular organisms, I have a hard time buying their investment acumen.

None the less, here is a study confirming the results.

The actions of the federal govemment can have a profound impact on financial markets.
As prominent participant.'^ in the govemment decision making pr(x:ess. U.S. Senators are
likely to have knowledge of forthcoming government actions before the inlormaiion becomes public. This could provide them with an informational advantage over other investors.We test for abnonnal retums from the common stock investments of members of the U.S. Senate during the period 1W3-I998. We document that a portfolio that mimics the purchases of U,S, Senators beats ihe market by H5 basis points per month, while a portfolio that mimics the sales of Senators lags the market by 12 basis points per month. The large difference in the returns of stocks bought and sold (nearly one percentage point per
month) is economically large and reliably positive.

More.....

and even more here.......