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Even with inside info, US politicians can't invest



May 18, 2010 – Comments (0)

I've got to say, while I enjoyed this jeremiad from Rich Smith about the ability of elected politicians to trade on insider information regarding policy moves, my partner in crime over at Global Gains Nate Parmelee rightfully pointed out that even with that inside information, the pols Rich is railing at here made some pretty crappy trades. Here;s one of Rich's examples:

And what do these reports tell us, you ask? As The Wall Street Journal discovered, they show some of our elected representatives:

Shorting U.S. Treasuries -- through buying the ProShares UltraShort 20+ Year Treasury exchange-traded fund (NYSE: TBT) -- at the very time they were bailing out AIG, adding tens of billions of dollars to the federal debt, and weakening our national balance sheet in the process.

Given the near-dire fiscal situation our country finds itself in today, shorting low interest rate Treasuries may turn out to be a savvy long-term move. But over the past year it's been a disaster. Since March 2009 TBT is down 15% while the market is up more than 50%. Keep it simple, stupids. If you're going to give companies free money, then just buy their darn stocks. As for TBT, interest rates may stay low for a while yet. We've got hotly contested elections approaching. Yeehaw. 

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