Compared to ordinary investors, US Congress members get huge returns on their investments, presumably via their inside line on upcoming government actions. In particular, Congress gets inside info on upcoming US-backed coups, and
How do you get the information on the congressional buys in time to take advantage of their buys? They disclose a lot of information annually, yes, but even if that's detailed enough to use, I imagine that most insider trading opportunities come and go before the filings are made.
This is probably a pretty dumb question, since I don't know much about finance, economics, or Congress. However: would it be possible to obtain similar returns by watching what investments, trades, or sales the members of Congress make?
For example, I'm imagining seeing Congressman A buy a bunch of Company B's stocks; then doing the same myself, thereby profiting from A's presumed inside info. If it were this easy, I suppose it would be done more... but can someone tell me where I'm going wrong?
It's not obvious, but it's still a leap. Why can't the inside traders be members of the respective agencies and their partners in the military-industrial complex and all their agents?
For example, there's a currently unfolding case of insider trading based on FDA approvals involving millions (http://pipeline.corante.com... - conducted by an FDA chemist, not someone tied to Congress in any way.
The coups paper only looks before the Hughes-Ryan act, because they fell off when the CIA was required to tell Congress. So, no, Congress did not have this info.
Robin, do you know of any studies that have been done that have shown the benefits of legalizing inside trading in financial markets?
In theory, the incentives should be better for catching fraudulent companies and reducing economic harm, but I am having trouble finding any such literature, one way or the other.
Insider trading by federal lawmakers banned.
I anticipate that RH considers this bad policy, but on the other hand, a move towards less hypocrisy.
Iām starting from the position that Congress leaking secret information via the stock market is a security risk.
I wonder, does Robin have a standard answer to this -- the inability to keep information secret -- as a general argument against futarchy?
Ah, that makes sense. Thanks gwern and Douglas.
Yes, the window is narrow. The claim of insider trading is based on the claim that the trades are a lot better than if they were a month later.
A natural follow-up would be to try to identify the specific reasons the stocks changed price.
Were severe economic restrictions on the Roman Senatorial class effective in aligning their behavior with national interest?
I'm starting from the position that Congress leaking secret information via the stock market is a security risk.
How do you get the information on the congressional buys in time to take advantage of their buys? They disclose a lot of information annually, yes, but even if that's detailed enough to use, I imagine that most insider trading opportunities come and go before the filings are made.
This is probably a pretty dumb question, since I don't know much about finance, economics, or Congress. However: would it be possible to obtain similar returns by watching what investments, trades, or sales the members of Congress make?
For example, I'm imagining seeing Congressman A buy a bunch of Company B's stocks; then doing the same myself, thereby profiting from A's presumed inside info. If it were this easy, I suppose it would be done more... but can someone tell me where I'm going wrong?
It's not obvious, but it's still a leap. Why can't the inside traders be members of the respective agencies and their partners in the military-industrial complex and all their agents?
For example, there's a currently unfolding case of insider trading based on FDA approvals involving millions (http://pipeline.corante.com... - conducted by an FDA chemist, not someone tied to Congress in any way.
How did researchers figure out what positions members of Congress had? Is this information publicly available?
OK, a fair point. But even if disclosure wasn't required, its not obvious that many in Congress didn't have the info.
The coups paper only looks before the Hughes-Ryan act, because they fell off when the CIA was required to tell Congress. So, no, Congress did not have this info.
Robin, do you know of any studies that have been done that have shown the benefits of legalizing inside trading in financial markets?
In theory, the incentives should be better for catching fraudulent companies and reducing economic harm, but I am having trouble finding any such literature, one way or the other.