Just as the best way to make money in gambling is to own a casino, so it seems the best way to outperform as an investor is to get elected to Congress.

And between 2004-2010 the best kind of member of Congress to be, at least in terms of investment performance, was a powerful Republican with an important committee assignment.

A newly revised study shows massive, persistent and troubling outperformance in the stock trades of members of Congress, a set of data which its author believes points to trading on inside information.

"Our results imply that the performance of congressional portfolios is mostly driven by private information that politicians acquire from sources inside and outside of Congress, based on their power and party membership," Serkan Karadas, an economist at Sewanee: The University of the South, writes in the study.

The study, which looked at almost 62,000 trades made by members of Congress in 2004-2010, found outperformance of 22.13 to 24.16 percentage points under a one-week holding period on an annual basis.

That short-term outperformance is significant, implying that the politicians were trading on time-sensitive information.

Powerful Republicans, defined as those with appointments to the 10 most important committees in the House or Senate, did best of all, outperforming the market by 32 to 36 percentage points under a one-week holding period annualized.

This kind of outperformance persisted even after Republicans lost control of Congress in 2006, while Democrats earned mediocre returns even in periods when that party was in control.

Make of that what you will, but it is unclear if the effects shown are driven more by power, information and access rather than better ethics in any particular party.

"The mediocre performance of Democrats' portfolios is quite different from their superior performance in the earlier time periods. We argue that this is due to long-term control of Congress and the network effect," Karadas writes.

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