They may have their fingers on the pulse of a nation. But just how well do our elected representatives in the nation’s capital pick winning stocks compared with Santa’s finest?
Economists at Dartmouth College and their undergraduate elves compared publicly disclosed stock trades by House and Senate members from January through December 2020. “Members’ picks tended to underperform the S&P 500 average by around 3.1%,” say the study’s leaders, who found little evidence for market timing or stock selection ability among the nation’s elected officials.
In contrast, reindeer at Santa’s Village in Jefferson, New Hampshire – about 1½ hours north of Dartmouth – outperformed the market by almost 5% in a single month (December, of course), or over 70 percent on an annualized basis. The reindeer made their picks by placing hoofprints on the Wall Street Journal stock pages, and showed a preference for stocks in the trending pharmaceutical and technology sectors.
Their results were excellent, say Dartmouth profs, noting that – in financial terms – the reindeer “exhibited herding behavior and a preference for momentum stocks.”
“Reindeer likely benefit from a high level view which enables them to sniff out emerging trends and to leap ahead of the crowd,” say the tongue-in-cheek researchers.
The Takeaway: It never pays to bet against Santa and his helpers, especially when it comes to building a winning portfolio.