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ya, but they aren't really making money insider trading. at least in aggregate. full analysis of their trades usually show an underperforming portfolio, despite

by jjeaff 3y ago

ya, but they aren't really making money insider trading. at least in aggregate. full analysis of their trades usually show an underperforming portfolio, despite grandiose articles that claim the opposite, which just cherry pick a few successful trades and ignore the bad and mediocre ones. It's mostly power brokering and it's the same way rich people and their children get and stay rich. Money flows to those with money because people want to buy influence and power.

yawpitch 3y ago
Top 10 congressional performers last year beat the S&P 500 by at least 200%, in the top case by nearly 1000%… that doesn’t appear to be cherry-picking a few successful trades. https://www.dailymail.co.uk/news/article-12930805/Members-Congress-money-trading-stocks-2023-Nancy-Pelosi.html https://www.dailymail.co.uk/news/article-12930805/Members-Co...
- kasey_junk 3y ago
  That’s not what the linked story says. It says that the top case beat the market by 200% and that it was through an Nvidia position purchased 4 years ago. The Congress person in question hasn’t made a single trade in the last 3 years. The 10th best position was 63% better than the s&p. That’s just a touch better than keeping your money in qqq. There might be evidence of congressional insider trading but the bare numbers aren’t it. In a population of 540 people you’d probably find similar outliers to what that article outlines.
  - yawpitch 3y ago
    Should have been more precise, the top position got returns of 10X (1000%) the market’s index return, meaning that congressperson “earned” $10 for every $1 the market gained, while the worst position got returns of 2X (200%) or $2 for every $1. The key thing is that of 100 trading members of Congress -of which not one (I believe) is a professional, full-time stock trader — 33% beat the SPY, and that this has been consistently true… the average professional, full-time trader can’t consistently do that. You might not see evidence of fire, but I definitely see evidence of smoke.
    - kasey_junk 3y ago
      Your linked article does not say that either. If you have some other source please link it. But more importantly your understanding of how trading is judged is flawed. It is trivial to find a population of traders that includes 33% of them that beat the market last year. In fact you can do so going back every year through time. What is hard (but not impossible) is to find a single trader who has done that consistently for many years. That’s because beating the market isn’t interesting, it’s beating it on a risk adjusted basis which is. In fact your linked article hints at this. The most active traders in Congress _under_ performed the markets. There simply isn’t evidence in aggregate that Congress people get market advantage through information only they have.
      - yawpitch 3y ago
        Take a look at the source of the graphic in the linked article (https://unusualwhales.com/politics/article/congress-trading-report-2023 https://unusualwhales.com/politics/article/congress-trading-...). Yes, you can cherry-pick a population that doesn’t have insider information where 33% beat the market in any given year, but you wouldn’t expect that same population to consistently beat the market, year over year. In fact the whole argument for index funds is that, in aggregate, no one, including professional traders or anyone else without unfair market advantage, consistently and reliably beats the market itself over the long run. But it seems here’s a population that both inarguably has insider information and where 33% does consistently beat the market over and over, year after year. Lack of evidence also simply isn’t particularly relevant, as the point isn’t to convict the legislator — who has the power to ensure such evidence isn’t available, and even if it were that it wouldn’t represent a crime, and even if it did that they wouldn’t be punished, etc — but instead to convince the voter to consider whether or not their vote should go to someone who disagrees with the notion that Caesar must be beyond reproach.
        kasey_junk 3y ago
        Your argument contains a pretty serious logic flaw. You are taking the top line argument (100 traders 33% beat the market, congress consistently beats the market, thus its indicative of an information advantage). But look at the underlying data. There are very few congress people that beat the market in 2023 and in 2022. I counted 5 members who beat the S&P in both years. Of those 3 have no trades, so were just marking existing positions that happened to be better than the market including the previously mentioned NVDIA stock. A 4th has 1 trade total. The final one is Ron Blumenthal. He is an active trader but also one of the richest men in politics. He made his money the old fashioned way, he married rich. Every other congress person would have been better off in an index fund as expected. Its easy to write dramatic headlines about Congress people trading, and there are very good reasons that they shouldn't (it influencing their votes is top of that) but there is very little evidence of any significant information advantage in the trading positions or returns of congress people.

by jjeaff 3y ago

yawpitch 3y ago

Top 10 congressional performers last year beat the S&P 500 by at least 200%, in the top case by nearly 1000%… that doesn’t appear to be cherry-picking a few successful trades. https://www.dailymail.co.uk/news/article-12930805/Members-Congress-money-trading-stocks-2023-Nancy-Pelosi.html https://www.dailymail.co.uk/news/article-12930805/Members-Co...

kasey_junk 3y ago
That’s not what the linked story says. It says that the top case beat the market by 200% and that it was through an Nvidia position purchased 4 years ago. The Congress person in question hasn’t made a single trade in the last 3 years. The 10th best position was 63% better than the s&p. That’s just a touch better than keeping your money in qqq. There might be evidence of congressional insider trading but the bare numbers aren’t it. In a population of 540 people you’d probably find similar outliers to what that article outlines.
- yawpitch 3y ago
  Should have been more precise, the top position got returns of 10X (1000%) the market’s index return, meaning that congressperson “earned” $10 for every $1 the market gained, while the worst position got returns of 2X (200%) or $2 for every $1. The key thing is that of 100 trading members of Congress -of which not one (I believe) is a professional, full-time stock trader — 33% beat the SPY, and that this has been consistently true… the average professional, full-time trader can’t consistently do that. You might not see evidence of fire, but I definitely see evidence of smoke.
  - kasey_junk 3y ago
    Your linked article does not say that either. If you have some other source please link it. But more importantly your understanding of how trading is judged is flawed. It is trivial to find a population of traders that includes 33% of them that beat the market last year. In fact you can do so going back every year through time. What is hard (but not impossible) is to find a single trader who has done that consistently for many years. That’s because beating the market isn’t interesting, it’s beating it on a risk adjusted basis which is. In fact your linked article hints at this. The most active traders in Congress _under_ performed the markets. There simply isn’t evidence in aggregate that Congress people get market advantage through information only they have.
    - yawpitch 3y ago
      Take a look at the source of the graphic in the linked article (https://unusualwhales.com/politics/article/congress-trading-report-2023 https://unusualwhales.com/politics/article/congress-trading-...). Yes, you can cherry-pick a population that doesn’t have insider information where 33% beat the market in any given year, but you wouldn’t expect that same population to consistently beat the market, year over year. In fact the whole argument for index funds is that, in aggregate, no one, including professional traders or anyone else without unfair market advantage, consistently and reliably beats the market itself over the long run. But it seems here’s a population that both inarguably has insider information and where 33% does consistently beat the market over and over, year after year. Lack of evidence also simply isn’t particularly relevant, as the point isn’t to convict the legislator — who has the power to ensure such evidence isn’t available, and even if it were that it wouldn’t represent a crime, and even if it did that they wouldn’t be punished, etc — but instead to convince the voter to consider whether or not their vote should go to someone who disagrees with the notion that Caesar must be beyond reproach.
      - kasey_junk 3y ago
        Your argument contains a pretty serious logic flaw. You are taking the top line argument (100 traders 33% beat the market, congress consistently beats the market, thus its indicative of an information advantage). But look at the underlying data. There are very few congress people that beat the market in 2023 and in 2022. I counted 5 members who beat the S&P in both years. Of those 3 have no trades, so were just marking existing positions that happened to be better than the market including the previously mentioned NVDIA stock. A 4th has 1 trade total. The final one is Ron Blumenthal. He is an active trader but also one of the richest men in politics. He made his money the old fashioned way, he married rich. Every other congress person would have been better off in an index fund as expected. Its easy to write dramatic headlines about Congress people trading, and there are very good reasons that they shouldn't (it influencing their votes is top of that) but there is very little evidence of any significant information advantage in the trading positions or returns of congress people.