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This is unlikely to work because of the timing delay. Suppose a member of Congress has access to inside information and trades on it. They have 45 days to discl
by not2b 5y ago
This is unlikely to work because of the timing delay. Suppose a member of Congress has access to inside information and trades on it. They have 45 days to disclose the trade. By the time the trade is disclosed, the market has already moved: if Pelosi or McConnell or whoever bought low so they could sell high, a month later the increase is probably already baked in.
- deleted 5y ago[deleted]
- vmception 5y agoIt does work for now because so many people trade the day the information comes out. Ive done it a few times, I get push notifications. If large holders want to sell into expected liquidity and remove any edge, then that’s the expected result, it is not happening right now.
- lucb1e 5y agoDo they have to disclose when they bought it, regardless of when they publish it in those 45 days? Because that would make for an incredibly interesting backwards-calculated index fund. Probably someone has already done this but I wouldn't know what to search for.
- throwaway09223 5y agoThis has basically been done, and is why people are interested in tracking trades. See https://www.researchgate.net/publication/227378283_Abnormal_Returns_From_the_Common_Stock_Investments_of_Members_of_the_US_House_of_Representatives https://www.researchgate.net/publication/227378283_Abnormal_... In fact, the idea of creating an ETF that tracks congressional trades in real time has also been floated: https://www.cnbc.com/2011/11/14/a-congressional-insider-trading-etf.html https://www.cnbc.com/2011/11/14/a-congressional-insider-trad... The idea's a little half baked, of course.
- 88913527 5y agoIt's nothing traditionally groundbreaking, either. Most of them are buying blue-chip tech stocks. Anyone mildly paying attention has known how well FANGs have done in the past decade. There isn't much to learn from these trades.
- tehjoker 5y agoStill probably would have helped with buying pandemic stocks after that secret briefing congress got where they said everything would be alright and then bought stocks in zoom and whatnot.
- bko 5y agoThis is also unlikely to work because Congress members don't do particularly well on trading. It's very hard to trade successfully, even with insider information its not entirely obvious what a stock price will do. It seems obvious because news media often reports ad-hoc analysis on a stock price movement. For instance, they'll say "Apple up 5% based on surprising App store revenue growth", but if it were to drop you may read a headline saying "Apple down 5% based on surprising drop in Mac sales". Sometimes I'll see an article touting the growth and only see it go back down by the time I get around to reading it. I've analyzed the trades of US Senators during the early pandemic [0] and I was not convinced they performed abnormally. And the trade amounts were relatively small. I think they'd have an easier time trading real-estate due to the connections they have with various regulatory bodies and local governments. [0] https://mleverything.substack.com/p/analyzing-us-senators-stock-picks-e8106bbbe8e https://mleverything.substack.com/p/analyzing-us-senators-st...
- DevKoala 5y agoEhh, Nancy Pelosi beats most hedge fund managers consistently year over year. https://unusualwhales.com/i_am_the_senate/pelosi https://unusualwhales.com/i_am_the_senate/pelosi
- aborochoff 5y agoThis looks to me to be just for 2020. Is there more analysis somewhere showing it’s consistent?
- cronix 5y ago* Nancy Pelosi's husband, Paul Not saying she didn't give him info, but she didn't do the actual trades. He's an investment manager. > Paul Pelosi, investment manager and the husband of House Speaker Nancy Pelosi, purchased up to $11 million worth of mega-cap tech stocks in May and June, according to a financial disclosure form filed last week. https://markets.businessinsider.com/news/stocks/nancy-pelosi-husband-buys-millions-4-mega-cap-tech-stocks-2021-7?op=1 https://markets.businessinsider.com/news/stocks/nancy-pelosi...
- paulpauper 5y agoYes this is the catch. You are trading on old data. Maybe someone could backtest to see if it still works.
- nradov 5y agoWhen stocks only go up, every trading strategy appears to work. Let's see what happens during the next sustained bear market.
- SubiculumCode 5y agoThat is why you have to judge it against an active baseline: for example, a buy and hold strategy.
- sydthrowaway 5y agoWhat would be a good strategy for the upcoming bear market?
- classified 5y agoDon't invest in losers.
- danuker 5y agoNot to put your wealth in it. Own something else. If you expect everything to fall vs. the national currency, buy the national currency.
- humaniania 5y agoAnd that's why you want to own a brokerage that members of Congress use for trading. Could probably recruit them with paid speaking gigs or jobs after they are no longer in office, or something like that. Maybe campaign contributions even. Maybe politicians shouldn't be able to own or trade stocks? Maybe they shouldn't be allowed to work in the private sector for a period of time after their service? They get a pension right?
- IAmGraydon 5y agoThis is all that needs to be said. Just like you can’t trade on the holdings of hedge funds declared in their 13F because of the time delay, attempting to trade on a congressperson’s trade declaration is nearly useless.
- known 5y agoI haven't seen Congress members doing https://en.wikipedia.org/wiki/Short_(finance) https://en.wikipedia.org/wiki/Short_(finance)
- TheDudeMan 5y agoThe including of the 45-day threshold in that law is tantamount to admission of corruption. Why else would it be there? Because we don't have the technology to automatically disclose their every trade in less time? (I know we are not talking about automatic disclosure, but if we were, the time scales could be seconds, not weeks.)
- Cthulhu_ 5y agoBut if you're the first to learn of it, trade, and then tell others about it so they trade, you still have the timing benefit. That's the thing of current-day amateur trading; some people get the first scoop, then hype it up on e.g. reddit for the masses to follow along. This was also a thing in crypto trading, where there are groups of amateur traders that plan internally to cause the stock market to change. They start the change, hype it up on social media, then sell off again before the hype hits its peak.
- georgyo 5y agoThis is called pump and dump. It is illegal to do on the stock market.
- deleted 5y ago[deleted]
- anonu 5y agoThis is unlikely to work because now everyone knows about it.