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We Asked Congress’s Freshmen to Give Up Stock Trading. Few Were Willing.

  • April 10, 2021

Additional attention in this area is a notion with bipartisan support, in an era that lacks much of that. In June, Representatives Chip Roy, Republican of Texas, and Abigail Spanberger, Democrat of Virginia, introduced what they called the Trust in Congress Act.

The bill would require their colleagues, spouses and dependent children to use a qualified blind trust, as Mr. Ossoff and Mr. Kelly are doing. With such vehicles, a third party would control individual stocks, if any, and some other investment assets and keep the beneficiary from knowing much about the contents or from trading on specialized knowledge of coming legislation. (Owning and trading common investments like mutual funds would be fine.)

“This is about making it easier for members of Congress to do their job,” Mr. Roy said at the time.

And let us not forget what I outlined in detail in a November column: They’ll all end up with more money in the end, on average, if they (or their stockbrokers) stop believing that they’re smart enough to beat the market. The studies on this are legion, and a particularly fun one showed how badly people in Congress did, on average, when they tried to outsmart the market between 2004 and 2008.

It is perhaps not surprising that those who would be elected officials would not be passive investors. The same enhanced sense of self that propels many of them to run for office may well make them think they have some kind of stock-picking superpower. They almost certainly don’t — and neither do the financial advisers who are charging them handsomely. Perhaps they’ll come to their senses eventually.

Others may own stock or trade it to blow off steam, as a form of gambling. If they can afford to lose the money, and are truly not using any inside information or in a position to influence the policies that affect the companies they bet on, then there is no real harm.

But do they wish to lose elections over it?

Certainly, stock trading wasn’t the only issue at play in Georgia. But in purple parts of the country or districts where upstarts in their own party would try to make a case of it, these newly elected officials could be vulnerable. If they avoid individual stocks for political reasons rather than more principled reasons, so be it. It’s all to the good.

Article source: https://www.nytimes.com/2021/04/10/your-money/congress-stock-trades.html

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