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Sit Eric Sit. Now Roll Over, Good Boy.

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February 14, 2012 – Comments (4)

Its always fun watching a well trained dog earn his rewards. 

Some might say it is unfair to compare a Congressman to a trained dog. Thats very nice.

Take the Congressman known as Eric Cantor for instance. One of the most important things to know about a dog is his breed and more specifically his lineage. Eric Cantor was trained under the tutelage of now retired Congressman Bliley  a very well trained dog himself. Congressman Bliley is the same Bliley of the infamous Financial Modernization Act of 1999, also know as the Graham-Leach-Bliley bill. The Graham-Leach-Bliley Finacial Modernization Act is the act which overturned Glass-Steagall's seperation of banking and investment.  Many people compare President Bill Clintons signing of the Financial Modernization Act into law with allowing Wall Street Wolves into your sheeps pen. The very same sheep you are counting on to get you through retirements winter.

Our sheep are beset by dangers from every side. Thieves, wolves, coyotes, and Congressmen. Congressmen charged with guarding our sheep. Just as we must train our dogs to not eat our sheep, we must train our Congressmen to not eat our investments. Dylan Ratigan, Tom Gardner, Free Thinkers and Followers have all jumped on the STOCK Act bandwagon. Stop Trading on Congressional Knowledge. Because while not all the dogs in the pen are bad, we need to protect our sheep from the bad ones. Our advisors on CNBC and FOX, and ABC have all sent their Wall Street experts on the case, outrageous as it is that we risk our sheep to unscrupulous guard dogs.

Protect us from Congress. 

You have to watch your dogs closely. Training takes time and care. A bad dog might get so caught up in protecting us from the new threat of itself that it forgets the old threat to our sheep. So lets check in with training that is to protect our sheep from our dogs.

 Last week, the Senate passed the STOCK Act to prevent Congressional insider trading. As the bill was being considered, amendments made it stronger. Notably, the Senate reinserted a provision on lobbyists, hedge fund managers and Wall Street traders obtaining and using inside government information. The provision is very modest, requiring only that so-called “political intelligence” consultants register.

“Political intelligence professionals aren’t considered lobbyists, so they don’t have to disclose that they’re seeking information and are paid for it” when they meet with elected officials or staffers, says Senator Charles Grassley, R-IA, who introduced the amendment. “As a result, members of Congress and congressional staff have no way of knowing whether such meetings result in information being sold to firms that trade based on that information. My amendment would shed sunshine on this kind of political intelligence gathering.”

Wall Street hates this measure. There’s a mini “political intelligence” industry that obtains information from political insiders and uses or sells it on Wall Street. You can see how knowing that a committee chair plans to add an obscure provision to a piece of legislation could translate into major, short-term advantage on the stock markets. Hedge funds love this kind of stuff...

... Wanting to preserve their unfair advantage from inside Congressional information, Wall Street lobbyists had Republican Majority Leader Eric Cantor strip the provision from the House bill.

http://www.commondreams.org/view/2012/02/13-5 

Eric is a very well trained dog.

It is well to remember why we need a STOCK act. 

 There is this curious fact: Members of Congress do demonstrably better on the stock marketthan average investors. There’s no plausible reason why this should be so other than that Members use their inside knowledge about legislation under consideration to place informed bets on the stock market.

Does that sound plausible to you? That the only way to outperform average investors is with insider knowledge? Are you investing without insider knowledge and only being outperformed by Congressmen with insider knowledge? 

Fool member Whereaminow recently advised me to substitute bubba the criminal type for a helpless little girl in an argument whether or not there should be laws to protect helpless little girls. He felt that imagining different characters in the little girls role would help me have a more balanced perspective. As Wall Streets investors and their mouthpieces on national tv are screaming about this issue of insider trading, lets follow Davids advice and substitute different characters in order to gain a more balanced perspective on the reason we believe Congress is trading on insider information.

 There is this curious fact: Members of Congress do demonstrably better on the stock marketthan average investors. There’s no plausible reason why this should be so other than that Members use their inside knowledge about legislation under consideration to place informed bets on the stock market.

From our Home page we have the Motley Fool newsletters results to consider.

 There is this curious fact: Motley Fool newsletters do demonstrably better on the stock marketthan average investors. There’s no plausible reason why this should be so other than that Members use their inside knowledge about legislation under consideration to place informed bets on the stock market.

or this.

 There is this curious fact: Warren Buffett does demonstrably better on the stock marketthan average investors. There’s no plausible reason why this should be so other than that Members use their inside knowledge about legislation under consideration to place informed bets on the stock market.

 There is this curious fact: Goldman Sachs does demonstrably better on the stock marketthan average investors. There’s no plausible reason why this should be so other than that Members use their inside knowledge about legislation under consideration to place informed bets on the stock market.

There is this curious fact: Half of all investors do demonstrably better on the stock marketthan average investors. There’s no plausible reason why this should be so other than that Members use their inside knowledge about legislation under consideration to place informed bets on the stock market.

Thanks for the help, David.

Get a grip people. Those barking dogs aren't the shepherds. They are the wolves hunting in packs.

And they are hunting your Congressmen. A ____ job here, a stock trade there, and negative adds everywhere.

The bleating you hear is the other sheep. 

Best wishes,

Steven 

4 Comments – Post Your Own

#1) On February 14, 2012 at 12:49 PM, edwjm (99.87) wrote:

If I were given the opportunity to remove just one member of the House of Representatives, my choice would be Eric Cantor.  I would pick him over John Boehner.

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#2) On February 14, 2012 at 1:52 PM, PeteysTired (< 20) wrote:

How about Harry Reid from the Senate?

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#3) On February 14, 2012 at 3:07 PM, devoish (97.33) wrote:

Fools,

My apologies to everyone who objected to my use of a vulgarity in this post. And my thanks to the TMF Community Ambassador who chose to edit the post rather than remove it.

Best wishes,

Steven 

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#4) On February 28, 2012 at 10:03 PM, whereaminow (< 20) wrote:

I'm glad you were able to implement my advice. Keep going, and you'll find that insider trading makes markets more efficient. No one should make any law banning insider trading.  All traders use it. It's only the outsiders who get persecuted.. er, prosecuted.

In Garet Garrett's book "The Driver", the main character makes the best defense of insider trading I've ever read.  Give it a whirl.

David in Liberty

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