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Political intelligence

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Political intelligence is carried out by a "small group of firms" that "mine" the Nation's Capital "for information and translate Washington wonkspeak into trading tips," Business Week reported December 26, 2005. "Unlike lobbyists, political intelligence outfits are not required to disclose their clients or annual revenues, masking the size of this very quiet business. One veteran estimates there are more than a half-dozen contenders collectively raking in $30 million to $40 million a year. Prominent players include the Washington research shops" of Prudential Financial Inc.[1], Lehman Brothers Holdings Inc.[2], and Stanford Washington Research Group, a subsidiary of the Stanford Group Company owned by Stanford Financial Group of Houston.


Study: U.S. Senate Stock Investments 1993-1998

"The actions of the federal government can have a profound impact on financial markets. As prominent participants in the government decision making process, U.S. Senators are likely to have knowledge of forthcoming government actions before the information becomes public. This could provide them with an informational advantage over other investors. We test for abnormal returns from the common stock investments of members of the U.S. Senate during the period 1993--1998. We document that a portfolio that mimics the purchases of U.S. Senators beats the market by 85 basis points per month, while a portfolio that mimics the sales of Senators lags the market by 12 basis points per month. The large difference in the returns of stocks bought and sold (nearly one percentage point per month) is economically large and reliably positive." --Alan J. Ziobrowski, Ping Cheng, James W. Boyd, and Brigitte J. Ziobrowski, "Abnormal Returns from the Common Stock Investments of the U.S. Senate," Journal of Financial and Quantitative Analysis, December 2004.

"The study suggests senators have an advantage over other investors because of information made available to them due to their position in the U.S. Senate." [3]

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