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The point is not if the politicians did better than they would have with another investing approach. It's a standard conflict of interest: the appearance of ins

The point is not if the politicians did better than they would have with another investing approach. It's a standard conflict of interest: the appearance of insider trading is corrosive because others see it and figure it's "how the game is played." So they need to do the same to keep up.

mewpmewp2 3y ago
Are you saying they shouldn't be allowed to buy stock at all? Because you could cherry-pick any period of time to highlight that they have outperformed the market.
- kelseyfrog 3y ago
  You could, but I'm positive that statisticians much smarter than me have devised a test tunable to any sensitivity one desires. The real question is, "What's our threshold of sensitivity, and what are the FPR and FNRs are we willing to endure?"
- BobaFloutist 3y ago
  Yeah probably not individually. They could put investment money in like an independent index fund maybe...? Although honestly there should probably be a "Congressional Investment Fund" that they have to put any stock investment money into that invests equally across all publicly traded companies or something.
- CydeWeys 3y ago
  That would be a very reasonable restriction. Anyone who works on Wall Street can only own broad index mutual funds.
  - seanhunter 3y ago
    It may have changed recently but that's not quite how the restrictions worked on Wall St in my experience (8yrs in the front office at Goldman). There are lots of restrictions to the point where owning broad funds often becomes simpler, but you can do single-stock trades etc if you want to. See another comment where I explain more but how it used to work for me was you have to trade through the employee trading desk (and aren't allowed to have unmonitored brokerage accounts) then any trade gets vetted against various lists (some but not all of which are available to you ahead of time to protect deal confidentiality) and then there are static criteria about how long you have to hold particular positions etc.
- bmitc 3y ago
  > Are you saying they shouldn't be allowed to buy stock at all? There are several jobs that are less powerful and have less conflicts of interest where that is indeed the policy.
- mardifoufs 3y ago
  Sure, why not? If they aren't willing to sacrifice that for their constituents, as to reduce any risk of conflicts of interest... I'm not sure they should be in any position of power to begin with. Why not just have their savings/pension in a known, public index fund?
OJFord 3y ago
If the 'other investing approach' is a broad market index like the S&P 500, where is the 'appearance if insider trading'? GP's point is that they could be almost entirely in the S&P500, with some minor innocuous deviation (tracking error, frankly!) and it would look the same. So this isn't really suspicious at all. Sure it's a US-focussed index, but isn't that you want from your politicians? (Outsider perspective here fwiw.) It'd be worse if they were some foreign country's politicians where the markets at home had done poorly and they'd basically tracked much better performing US index.
- despideme 3y ago
  Anecdata to follow. Does this not look suspicious? https://www.threads.net/@quiverquantitative/post/CzcB_jyA_pD https://www.threads.net/@quiverquantitative/post/CzcB_jyA_pD The politician in question is a 69 year old former football coach who bought stock in a cloud-based e-commerce software vendor before the company was acquired, then when the stock spiked 50%, he sold it right away.
  - defrost 3y ago
    Well, if you factor in that he bought his position of > $600K US in multiple buys less than a month before the spike then yes, you might say it was a little suspicious. What a lucky man.
    - kasey_junk 3y ago
      Turns out US insider trading laws have nothing to do with fairness (even if you aren’t a congressperson). They have to do with theft. Me trading against you from an information advantage is encouraged! This isn’t an insider trading issue, it’s an ethics issue.
  - stouset 3y ago
    Yes, it is likely individual politicians are making insider trades. It is also likely that some of those politicians are making bad trades based on overvalued or misvalued insider information. I have personally seen this in other contexts where people know something presumed private about a company, assume it’s a bigger deal than it is, and trade on that information. It’s also likely that there are a lot of politicians who are generally just as bad as the average person at stockpicking. All this combined, and it’s reasonable that the overall trend will be mostly in-line with the market, but likely overperforming sonewhat in the long run based on the volume and quality of insider trades. One year and change isn’t the long run.
kevinpet 3y ago
You could say it doesn't matter and they need to avoid even the appearance of impropriety, and I would agree. However, it seems clear that the entire point of this particular trading bot and the project is in fact whether politicians did better than another investing approach.

mewpmewp2 3y ago

Are you saying they shouldn't be allowed to buy stock at all? Because you could cherry-pick any period of time to highlight that they have outperformed the market.

kelseyfrog 3y ago
You could, but I'm positive that statisticians much smarter than me have devised a test tunable to any sensitivity one desires. The real question is, "What's our threshold of sensitivity, and what are the FPR and FNRs are we willing to endure?"
BobaFloutist 3y ago
Yeah probably not individually. They could put investment money in like an independent index fund maybe...? Although honestly there should probably be a "Congressional Investment Fund" that they have to put any stock investment money into that invests equally across all publicly traded companies or something.
CydeWeys 3y ago
That would be a very reasonable restriction. Anyone who works on Wall Street can only own broad index mutual funds.
- seanhunter 3y ago
  It may have changed recently but that's not quite how the restrictions worked on Wall St in my experience (8yrs in the front office at Goldman). There are lots of restrictions to the point where owning broad funds often becomes simpler, but you can do single-stock trades etc if you want to. See another comment where I explain more but how it used to work for me was you have to trade through the employee trading desk (and aren't allowed to have unmonitored brokerage accounts) then any trade gets vetted against various lists (some but not all of which are available to you ahead of time to protect deal confidentiality) and then there are static criteria about how long you have to hold particular positions etc.
bmitc 3y ago
> Are you saying they shouldn't be allowed to buy stock at all? There are several jobs that are less powerful and have less conflicts of interest where that is indeed the policy.
mardifoufs 3y ago
Sure, why not? If they aren't willing to sacrifice that for their constituents, as to reduce any risk of conflicts of interest... I'm not sure they should be in any position of power to begin with. Why not just have their savings/pension in a known, public index fund?

OJFord 3y ago

If the 'other investing approach' is a broad market index like the S&P 500, where is the 'appearance if insider trading'? GP's point is that they could be almost entirely in the S&P500, with some minor innocuous deviation (tracking error, frankly!) and it would look the same. So this isn't really suspicious at all. Sure it's a US-focussed index, but isn't that you want from your politicians? (Outsider perspective here fwiw.) It'd be worse if they were some foreign country's politicians where the markets at home had done poorly and they'd basically tracked much better performing US index.

despideme 3y ago
Anecdata to follow. Does this not look suspicious? https://www.threads.net/@quiverquantitative/post/CzcB_jyA_pD https://www.threads.net/@quiverquantitative/post/CzcB_jyA_pD The politician in question is a 69 year old former football coach who bought stock in a cloud-based e-commerce software vendor before the company was acquired, then when the stock spiked 50%, he sold it right away.
- defrost 3y ago
  Well, if you factor in that he bought his position of > $600K US in multiple buys less than a month before the spike then yes, you might say it was a little suspicious. What a lucky man.
  - kasey_junk 3y ago
    Turns out US insider trading laws have nothing to do with fairness (even if you aren’t a congressperson). They have to do with theft. Me trading against you from an information advantage is encouraged! This isn’t an insider trading issue, it’s an ethics issue.
- stouset 3y ago
  Yes, it is likely individual politicians are making insider trades. It is also likely that some of those politicians are making bad trades based on overvalued or misvalued insider information. I have personally seen this in other contexts where people know something presumed private about a company, assume it’s a bigger deal than it is, and trade on that information. It’s also likely that there are a lot of politicians who are generally just as bad as the average person at stockpicking. All this combined, and it’s reasonable that the overall trend will be mostly in-line with the market, but likely overperforming sonewhat in the long run based on the volume and quality of insider trades. One year and change isn’t the long run.

kevinpet 3y ago

You could say it doesn't matter and they need to avoid even the appearance of impropriety, and I would agree. However, it seems clear that the entire point of this particular trading bot and the project is in fact whether politicians did better than another investing approach.