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How to Invest with Your Lawmakers

Laws create jobs. New regulation can make or break businesses and whole industries.

It’s no wonder companies spend billions lobbying. They sponsor politicians to push their agendas.

The government is controlled by money… not the masses. Our democracy is largely a façade. And at the heart of our democracy is Congress.

Congress is made up of 535 voting members: 100 senators and 435 representatives. They’re all elected officials from our political theater. These 535 members make laws for our nation of 320 million people.

Congress members make $174 thousand each year. In 2014 The New York Times reported that for the first time in history, more than half the Congress members are millionaires. The net worth of some members of Congress exceeds $100 million.

Their fortunes come from many sources. Some were born into it. Others were self-made. But there is one commonality. They build their wealth quickly while in office. Control over new laws gives them an edge to build and protect their wealth.

Companies and other special interest groups pay (indirectly) our politicians. In return, their hands guide new policy. In other words, they pat each other’s backs.

To get a grasp on how much companies spend on lobbying, let’s look at a few examples…

  • Top airline builder Boeing spent over $21 million.
  • Conglomerate General Electric spent almost $21 million.
  • Energy giant Exxon Mobil spent almost $12 million.

These numbers are just for 2015. According to opensecrets.org, $3.2 billion was spent on lobbying last year. Politicians receive a piece of this giant cash pie. But that’s not the only way they build wealth. Many Congress members invest.

In 2011 Barron’s cited a study showing that members of the House of Representatives outperform the average stock-market investor by 55 basis points a month. That’s 0.55% or 6.8% compounded in a year. An extra 6.8% compounding over decades can lead to millions of dollars more.

Last week I showed you how to look over the shoulders of the world’s best investors. Now I’m adding Congress members too. In 2012, the STOCK Act was passed. It forces lawmakers to publicly report their investments within 45 days.

Congress members’ insight into the policy pipeline gives them an edge. Smart investors track their movements. You can find Congress members’ assets listed on opensecrets.org… or directly through the Office of the Clerk.

Some of the most held companies by Congress members have the most lobbying. No surprise there.

Up until the STOCK Act, Congress members were exempt from insider trading laws. Today there are limits. Still, their portfolios are a great place to look for investment ideas.

 

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One Comment

  1. Roger

    Me thinks it’s time for term limits —big time!!

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