Jaime G. Herran La Torre, a UHV College of Business student in the Strategic Master of Business Administration in marketing program, joined UHV faculty members Peggy Cloninger and Massoud Metghalchi as a coauthor on an article titled “Can Members of Congress Beat the Market?” The article was recently published in Technical Analysis of Stocks & Commodities.

Jaime Herran La Torre

Shortly after Herran La Torre started his graduate assistantship at the UHV Katy instructional site, Cloninger, a professor of management who teaches business and society classes, asked him if he’d like to join the research effort as a coauthor. Herran La Torre, who hails from Piura, Peru, and lives in the Houston area, jumped at the chance and had the responsibility of preparing the data file. 

“It was a great experience, and I learned so much about the stock market,” Herran La Torre said. “I previously hadn’t had much experience with trading and investing other than what I had learned in my undergraduate classes. This gave me a much clearer understanding of how it all worked.”

Cloninger had the idea for the research after learning people were following the stock trades of members of Congress, and some people believed lawmakers had information that allowed them to make trades that would “beat” the market. Cloninger wanted to know if this was true and approached Metghalchi, a UHV finance professor, to join her in testing the idea.

Cloninger knew that U.S. Senators Mark Kelly and Jon Ossoff had recently proposed the “Ban Congressional Stock Trading Act” that, if passed, would require members of Congress, their spouses and dependent children to place their stock portfolios into a blind trust. Currently, members of Congress can trade but are required to disclose any stock trade made by themselves, a spouse or a dependent child within 45 days. 

Under the guidance of Cloninger and Metghalchi, Herran La Torre downloaded data reported in Capitol Trades between 2019 and 2021, and included a column indicating the sector, such as communication, financial, real estate or energy. Then he used Yahoo Finance and the Wall Street Journal to identify the closing prices on Dec. 31, 2021, for each stock. The final sample consisted of 581 trades reported by 11 Republicans and 10 Democrats, including one Independent who caucuses with the Democrats. When Metghalchi ran the numbers, the team found that lawmakers did not “beat” the market.

From this research effort, Herran La Torre learned a lot about the intersection of business and government as well as finance concepts such as the efficient market hypothesis, he said. He’s looking forward to continuing his Strategic MBA and having more opportunities to work with UHV College of Business professors.

“This hands-on experience has been a serious benefit for me, and I am grateful to Drs. Cloninger and Metghalchi for choosing me for this research,” he said. “UHV was the perfect choice for my graduate degree, and UHV Katy is the perfect location for me and other Houston-area students. Everything about my interactions with and experience at UHV has been great, from the friendly faculty to the supportive staff who helped me get scholarships and choose my courses.”

Cloninger and Metghalchi say it was a pleasure to work with Herran La Torre. UHV business professors are always keen to engage their students in innovative projects to enhance their learning and fulfill their mission as an AACSB International – The Association to Advance Collegiate Schools of Business accredited college. Only a small percentage of business programs in the world are accredited by AACSB International. Part of the AACSB’s mission is to connect business schools, industry, nonprofits, and government to drive positive societal change in the world. 

The UHV College of Business offers fully accredited programs in a variety of programs including general business, accounting, finance, human resources management, management, marketing and supply chain management.