Take a Peek at Your Congressman's Test Portfolio

Andy Obermueller's picture

Thursday, August 6, 2009 - 2:14pm

by Andy Obermueller

We all know that Congress is only too happy to "invest" our money. But how are they when it comes to managing their own?

Not so great, as it turns out.

A review of the personal financial disclosures filed by members of the U.S. Senate and House of Representatives gives some insight into just how bad these politicians are at managing money.

The table below shows the 15 most popular stocks held by members of Congress, with the number of owners to the right:

If $1,000 had been invested in each of the 15 most popular stocks held by Congress on Jan. 1, 2008, the entire portfolio would be worth $10,148 today, a loss of -32.3%. This exceeds the total loss of the S&P 500 index, which has fallen -31.7% in the same period. In fact, only one of the companies, IBM, has shown a positive return, though nine companies posted smaller losses than the benchmark, losses that could have been made smaller still with reinvested dividends.

As you can imagine, the Democrats and Republicans weren't in agreement on many companies. Just two, in fact, out of the 50 most common holdings, had equal bipartisan support: Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) and Microsoft (Nasdaq: MSFT).

President Obama has taken some criticism that he leaves too many details to Congress. But he's not about to follow their investment lead. A large percentage of the president's wealth, which was disclosed in May soon after he made his tax return public, is in cash and U.S. Treasuries. His only exposure to the stock market is mutual funds held in retirement accounts. Unfortunately, though Mr. Obama did protect his portfolio from losses, this is one domestic program that he can't take credit for. His assets are held in a blind trust.

The top 10 richest members of Congress, however, don't have large stock holdings, as least not relative to their overall wealth. Most have taken steps to ensure their fortunes are well diversified, though some, like Herb Kohl, have most of their wealth in one asset. Kohl owns the Milwaukee Bucks. Sen. Ted Kennedy of Massachusetts inherited his wealth from his father, Joe, which is mostly wrapped up in trusts. And most people are probably familiar with the Rockefeller fortune. (Oysters, wasn't it?)

 
 

The richest member of Congress, Rep. Jane Harman of California, owns Harman International, an electronics company. Her major holdings include municipal bonds, which help her avoid taxes, government bond funds, which limit risk, and hedge funds, which pursue it. Her largest stock holding appears to be Apple (Nasdaq: AAPL).

The poorest member of Congress was Alcee Hastings of Florida, who had less than $15,000 in assets -- his checking account -- but who owed $7.4 million. How can you owe that much and have no assets to show for it? It's a common problem on Capitol Hill: Legal fees.

Andy Obermueller does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.