God's Diagnostician Also Investment Genius!
What with the Repugs' implosion and the rise in Virgin Mary sightings, this post has been on the back burner here at Agitprop. But it's important. You will all recall that Bill Frist, Senate Majority Leader and video diagnostician, is currently being investigated by the SEC for insider trading. Frist apparently lied about the reason he sold his stock at the top of the market.
But Bill is but one thread in a much larger investment tapestry. In a piece in The New Yorker, James Surowiecki observes that a systematic study last year
looked at six thousand stock transactions made by senators between 1993 and 1998. Over that time, senators beat the market, on average, by twelve per cent annually. Since a mutual-fund manager who beats the market by two or three per cent a year is considered a genius, the politicians’ ability to foresee the future seems practically divine. They did an especially good job of picking up stocks at just the right time; their buys were typically flat before they bought them, but beat the market by thirty per cent, on average, in the year after. By those standards, Frist actually looks like a bit of a piker.
Now why do you suppose senators beat financial geniuses? Do you suppose it's because, as the authors of the study suggest, "at least some senators must have been trading 'based on information that is unavailable to the public'—in other words, they were engaged in some form of insider trading"?