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Here's my "Tom Clancy movie plot" evil fund. Someone starts a fund that's actually based on figuring out the portfolios of Senators, moderately high net worth c

Here's my "Tom Clancy movie plot" evil fund. Someone starts a fund that's actually based on figuring out the portfolios of Senators, moderately high net worth congresspersons and other Washington insiders. However, instead of duplicating the entire portfolios of the whole populace, you first filter for IQ, an age range where people are starting to be very well connected but still making their fortunes, and develop another filter based on a quantitative proxy for riskiness of each investment. This is what the fund will really be based on, though there will be a fig leaf fictional method advertised. The purpose of this is to piggyback on the (technically-not) insider trading such people will manage to do while still staying within the letter of the law. (Somehow, the collective portfolios of US representatives manage to greatly outperform the stock market indexes.)

RangerScience 10y ago
> Somehow, the collective portfolios of US representatives manage to greatly outperform the stock market indexes. I would totally believe this. Do you have a source?
- echion 10y ago
  For example: "Trading on Private Information: Evidence from Members of Congress" (2016) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2712297 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2712297 EDIT: Also "Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives" (2011) https://www.cambridge.org/core/journals/business-and-politics/article/div-classtitleabnormal-returns-from-the-common-stock-investments-of-members-of-the-us-house-of-representativesdiv/BC6C6A524BBE96738BB94D37EF0FD1A5 https://www.cambridge.org/core/journals/business-and-politic...
ithought 10y ago
The investor mentioned in the article is the basis for Axe Axelrod in Billions. Which is a wildly outrageous portrayal of him but probably has a lot of elements of truth (eg extreme paranoia) since he was clearly guilty of insider trading (his subordinates indicted, his firm charged but not him).
- justin 10y ago
  I think the characters name is Bobby Axelrod.
inputcoffee 10y ago
This (insider trading by representatives) was common practice till the STOCK act: https://en.wikipedia.org/wiki/STOCK_Act https://en.wikipedia.org/wiki/STOCK_Act Check out the amendment in the last paragraph for more ideas for your Tom Clancy movie.
- ksherlock 10y ago
  it still is common practice. http://www.politico.com/story/2017/05/14/congress-stock-trading-conflict-of-interest-rules-238033 http://www.politico.com/story/2017/05/14/congress-stock-trad...
- deleted 10y ago
  [deleted]
tryitnow 10y ago
Why exactly would that be evil? Everything you're talking about is public information. And how on earth would you measure IQ? By some proxy measure? That seems like it would introduce unnecessary noise. It's not clear to me that any proxy for IQ would be a good predictor of outsized returns. It seems like the best bet is just to filter on powerful Republican Senators: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2712297 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2712297
- stcredzero 10y ago
  Why exactly would that be evil? You misread "evil fund." The fund itself may or may not be evil. However, it relies on not-illegal-or-not-caught activity to provide it information to purchase investments.
hxta98596 10y ago
This sort of exists. It's not evil or secret though (funds can't make the large $ amount sized trades they need to do and keep it secret). Also while some funds do employ a type of 'regulatory risk arbitrage' it's usually part of a larger strategy, e.g. event-driven funds, which are slightly more sophisticated and a few miles ahead of what Tom Clancy could come up with. For example lobbyists and legal data would be relevant to the analysis as they may be forward indicators. 'Truth can be stranger than fiction'...
- stcredzero 10y ago
  This sort of exists. Yes. No surprise there. It's not evil or secret though Through legally obtained aggregate data, you can be pretty sure that some evil is going on in the observed population. Then you can use the same sort of data to also profit off of that evil activity. It's an "evil fund" in the same way that you can have a gold industry ETF. The ETF itself doesn't buy, sell, produce, or own gold. However, such a gold industry ETF can still piggyback off of its profits. More precisely, it would be a "surreptitious legislative evil" fund. event-driven funds, which are slightly more sophisticated and a few miles ahead of what Tom Clancy could come up with. I'm not an investment guru. This is just what I could come up with off the top of my head.
  - hxta98596 10y ago
    Gotcha. Well the funds are not illegal or secret, let's put it that way :) I do think the world of Wall St. and Washington would make a crazy interesting movie. Maybe the "evil" funds buy stakes in various companies then lobby greedy politicians to make new laws aimed at giving advantages and profits to only those specific companies. At the same time these Dr. Evil types employ a revolving door strategy where they send trusted fund employees to work in government and they hire retiring politicians for huge salaries to make up the years they were underpaid "doing public service". Just an idea.

RangerScience 10y ago

> Somehow, the collective portfolios of US representatives manage to greatly outperform the stock market indexes. I would totally believe this. Do you have a source?

echion 10y ago
For example: "Trading on Private Information: Evidence from Members of Congress" (2016) https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2712297 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2712297 EDIT: Also "Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives" (2011) https://www.cambridge.org/core/journals/business-and-politics/article/div-classtitleabnormal-returns-from-the-common-stock-investments-of-members-of-the-us-house-of-representativesdiv/BC6C6A524BBE96738BB94D37EF0FD1A5 https://www.cambridge.org/core/journals/business-and-politic...

ithought 10y ago

The investor mentioned in the article is the basis for Axe Axelrod in Billions. Which is a wildly outrageous portrayal of him but probably has a lot of elements of truth (eg extreme paranoia) since he was clearly guilty of insider trading (his subordinates indicted, his firm charged but not him).

justin 10y ago
I think the characters name is Bobby Axelrod.

inputcoffee 10y ago

This (insider trading by representatives) was common practice till the STOCK act: https://en.wikipedia.org/wiki/STOCK_Act https://en.wikipedia.org/wiki/STOCK_Act Check out the amendment in the last paragraph for more ideas for your Tom Clancy movie.

ksherlock 10y ago
it still is common practice. http://www.politico.com/story/2017/05/14/congress-stock-trading-conflict-of-interest-rules-238033 http://www.politico.com/story/2017/05/14/congress-stock-trad...
deleted 10y ago
[deleted]

tryitnow 10y ago

Why exactly would that be evil? Everything you're talking about is public information. And how on earth would you measure IQ? By some proxy measure? That seems like it would introduce unnecessary noise. It's not clear to me that any proxy for IQ would be a good predictor of outsized returns. It seems like the best bet is just to filter on powerful Republican Senators: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2712297 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2712297

stcredzero 10y ago
Why exactly would that be evil? You misread "evil fund." The fund itself may or may not be evil. However, it relies on not-illegal-or-not-caught activity to provide it information to purchase investments.

hxta98596 10y ago

This sort of exists. It's not evil or secret though (funds can't make the large $ amount sized trades they need to do and keep it secret). Also while some funds do employ a type of 'regulatory risk arbitrage' it's usually part of a larger strategy, e.g. event-driven funds, which are slightly more sophisticated and a few miles ahead of what Tom Clancy could come up with. For example lobbyists and legal data would be relevant to the analysis as they may be forward indicators. 'Truth can be stranger than fiction'...

stcredzero 10y ago
This sort of exists. Yes. No surprise there. It's not evil or secret though Through legally obtained aggregate data, you can be pretty sure that some evil is going on in the observed population. Then you can use the same sort of data to also profit off of that evil activity. It's an "evil fund" in the same way that you can have a gold industry ETF. The ETF itself doesn't buy, sell, produce, or own gold. However, such a gold industry ETF can still piggyback off of its profits. More precisely, it would be a "surreptitious legislative evil" fund. event-driven funds, which are slightly more sophisticated and a few miles ahead of what Tom Clancy could come up with. I'm not an investment guru. This is just what I could come up with off the top of my head.
- hxta98596 10y ago
  Gotcha. Well the funds are not illegal or secret, let's put it that way :) I do think the world of Wall St. and Washington would make a crazy interesting movie. Maybe the "evil" funds buy stakes in various companies then lobby greedy politicians to make new laws aimed at giving advantages and profits to only those specific companies. At the same time these Dr. Evil types employ a revolving door strategy where they send trusted fund employees to work in government and they hire retiring politicians for huge salaries to make up the years they were underpaid "doing public service". Just an idea.