Congress was trading on insider information — and it was 100% legal.
Here’s an excerpt from the “60 Minutes” Report:
“In mid September 2008, with the Dow Jones Industrial Average still above 10,000, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke were holding closed-door briefings with congressional leaders, and privately warning them that a global financial meltdown could occur within a few days.
“While Congressman Bachus was publicly trying to keep the economy from cratering, he was privately betting that it would, buying option funds that would go up in value if the market went down.
He would make a variety of trades and profited at a time when most Americans were losing their shirts.”
And this isn’t the only case. There’s plenty of documentation of this kind of behavior going on — on both sides of the aisle — for years.
It’s enough to make you sick. No wonder nearly half of the members of Congress are millionaires and their investments outperform the average investor’s by an extra 6.8% each year. That’s no small potatoes, either. It can add up to thousands — even millions of dollars over time.
Something had to be done. Luckily, thanks to widespread attention finally being given to this issue, Congress actually passed the Stop Trading on Congressional Knowledge Act (STOCK Act) earlier this year.
But if you think that alone will stop members of Congress from handily outperforming the average American’s portfolio year after year, then I think you’re sorely mistaken. There’s more to it than that…
That’s why I’ve decided to share an interesting piece of research with readers: the most popular high-yield stock owned by members of Congress.
The stock I’m talking about is AT&T (NYSE: T). At last count, 57 members of Congress — 20 Democrats and 37 Republicans — owned stock in the company. That makes it the most popular income stock owned by our representatives on Capitol Hill.
And in this case, they might be on to something.
Right now this stock yields 4.7%… and it’s one of the most stable dividend-payers in the United States. During the recession, dividends stayed steady, but in the past five years, investors have enjoyed five annual dividend increases.
Action to take –> Let me be clear. We’re not suggesting Congress has inside information on AT&T. But when dozens of millionaires with a history of beating average investors year after year own a particular stock, we think it’s smart to pay attention.
– Paul Tracy
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Paul Tracy does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC owns shares of T in one or more if its “real money” portfolios.