Abstract
Given the concerns over informed stock trading by U.S. senators and congresspeople at the beginning of the COVID pandemic, we examine these legislators’ short term stock trading results during 2020. We find little evidence for market timing or stock selection ability. Both Senators’ and House Members’ stock selections underperform the S&P at the one month horizon and underperform a size-industry adjusted benchmark at the 3 and 6 month time frames. Returns to legislators’ purchases contrast with returns to the top stock picks from U.S. brokerage houses and stocks chosen by Santa’s Reindeer (Santa’s Village Jefferson NH). As a group the Reindeer outperform the S&P by 4.89 percent in a single month, or over 70 percent on an annualized basis. However reindeer exhibit herding behavior and a preference for momentum stocks.
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