The Best Investors On The Planet Are US Senators

It's time to turn off Marketwatch.

The most successful investors on the planet aren't fund managers. They're not corporate insiders either. In fact, most people don't even know these guys invest at all. But their returns are truly spectacular.

Between 1993 and 1998, they outperformed the market by an average of 12%. Bear in mind, they didn't simply produce annual gains of 12% ... they beat the market by an average of 12%. In contrast, corporate insiders beat the market by 5%, while the typical US household trailed the market by 1.4%.

Who are these super investors?

US Senators.

Volumes have been written about the corruption and backdoor dealings of the US Congress. But as far as I know, only one study has ever focused on the Senate's stock picking abilities. And that study, performed by Alan Ziobrowski of Georgia State University, found that on average US Senators outperformed the market by an average of 12% from 1993-1998.

It's not difficult to see the reasoning here. Senators are privy to proposed tax legislation and other non-public information long before most investors. Figuring out which companies will benefit from this information isn't rocket science.

So what are Senators buying today?

I wish I could tell you. Last year's data hasn't been released yet. But the 2006 financial statements are available online at www.opensecrets.org. According to their documentation, the top ten stock holdings for US Senators in 2006 were:

Company # of Senators Who Own It

General Electric 21

Johnson & Johnson 20

Microsoft 16

Bank of America 15

Exxon Mobil 15

Proctor & Gamble 15

Pfizer 14

Home Depot 14

Intel 14

Pepsico 13

As you can see, more than one in three senators owned General Electric and Johnson & Johnson while one in four own Microsoft, Bank of America, Exxon Mobil, and Proctor & Gamble.

Looking at the size of these companies, it's tempting to say that Congress can't have much of an impact on their business. After all, even a $1 billion contract wouldn't add a tremendous amount to their revenues.

However, in the US the business/ politics relationship is rarely that obvious (Halliburton, of course being an exception). Instead, Congress tends to dish out its aid in the form of tax cuts and other backdoor dealings.

Consider the big oil companies, for example.

In February 2008, the US House of Representatives passed a bill that would remove $18 billion in tax breaks for big oil companies. On the face of it, the bill looked like the House was backing up their claims to crack down on big oil's profits.

That is, until you realize that the five largest US oil companies alone made over $123 billion last year... and one in ten members of the House own Exxon stock. Senate ownership for big oil is even higher.

Somehow I don't think this bill will make it past the Senate.

I mentioned last week that today investors have a once in a decade opportunity to load up on top quality blue chip businesses. Looking at the above table, it's clear US Senators-guys who outperform the market regularly- agree with me. I highly suggest buying now if you haven't already done so.

reference:ezinearticles.com