A study suggests that U.S. senators possess stock-picking skills that even the most seasoned money manager would envy. During the boom years of the 1990s, senators’ stock picks beat the market by 12 percentage points a year on average, according to the study. Corporate insiders, meanwhile, beat the market by about six percentage points a year, while U.S. households underperformed the market by 1.4 percentage points a year on average, according to separate studies. The final details of the study will be published in the December issue of the Journal of Financial and Quantitative Analysis.
The study’s authors, relying on financial-disclosure forms from 1993 to 1998, looked at about 6,000 common-stock transactions of about a third of the senators each year. The researchers then mimicked the senators’ transactions, buying the stocks the senators bought and selling the shares they sold. Over a six-year period, that “superportfolio” essentially beat the market by about one percentage point a month, or 12 percentage points a year.
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Looking at the timing of cumulative returns, the senators also appeared to know exactly when to buy or sell their holdings. Senators would buy stocks just before the shares suddenly would outperform the market by more than 25%. Conversely, senators would sell stocks that had been beating the market by about 25% for the past year just when the shares would fall back in line with the market’s performance.
Daily Archives: October 27, 2004
Amar Bose Interview
Amar Bose, founder and chairman of the Bose Corporation, is interviewed by Brad Lemley in the October Discover Magazine:
?Research in this country is going down . . . The quickest way to save your bottom line is to cut research?
Verizon is starting to install fiber to the home
Still lagging Japan & Korea (price & performanc), Verizon is starting to offer fiber internet access to the home. Speeds range from 5MB to 30MB down and 2 to 5MB up (the difference makes no sense, it should be identical). Once again, Wisconsin lags significantly behind…