When Lawmakers Become Moneymakers – Part I

[The Bleeding Edge]( Colin’s Note: Congress crushed the markets in 2023… About a third of Congress members outperformed the market’s return with some seeing their portfolios grow by 50% or more… So, today, we’re highlighting an insight from colleague and former Wall Street executive, Nomi Prins. She does a deep dive into the investment habits of Congress members – especially the top-gainers of last year… Then, later this week, we’ll follow up with Nomi on the sectors and individual companies at the core of Congress’ investments… Plus how you, too, can invest like a politician. It’s all in the essay below… --------------------------------------------------------------- When Lawmakers Become Moneymakers – Part I By Nomi Prins, Editor, Inside Wall Street With Nomi Prins When you think of the world’s greatest investors, you probably think of Warren Buffett… John Paulson… or maybe Michael Burry of The Big Short fame. But I’ll add one name to that list. It’s a name that shouldn’t be there, and yet it makes the cut every year: the U.S. Congress. Sure, 2023 was a great year for the markets. The S&P 500 – a benchmark for U.S. stocks – ended the year up 24.8%. But it was “just OK” when you compare it to the returns of some members of Congress. About a third of Congress members beat the market’s return. Some saw the value of their portfolio grow by more than 50%. Some did even better. (I’ll name names in a moment.) In recent years, there have been calls – and apparent bipartisan backing – to ban members of Congress from trading and owning stocks. But how do you get politicians to take away their own ability to trade securities while in Congress? I’m not holding my breath for it. Instead, I’m more interested in where all that money is going. So we’ll be diving into the investment habits of Congress members – the gains, sectors, and companies they put their money into last year. And I’ll show you how you, too, can trade like a politician. Congress Crushed the Market in 2023 I’ve been tracking Congress members’ investments in these pages since we launched Inside Wall Street in 2021. The idea is that if you know where America’s most powerful are putting their money, you can also position yourself to reap some of the profits. And we’ll start unraveling the thread of Congress’s investments… For this year’s edition, we put together a list of the Top 10 members of Congress who beat the market in 2023, along with their respective gains. You can see the results in the chart below… [Image] The biggest winners are on the right. You can see that Rep. Brian Higgins topped all Congress members. He made a 239% return on his investments. Rep. Mark Green, the Homeland Security Committee chair, booked a 122% return. And Rep. Garret Graves, a close ally of former House Speaker Kevin McCarthy, had a 108% return. One familiar name made the Top 10 list again this year: former House Speaker Nancy Pelosi. In previous years, we showed you how Pelosi – through her husband Paul – was Congress’ top trader. The Pelosis outperformed the market both in 2020 and 2021. Nancy’s performance in 2021 probably made her one of the greatest Washington insider investors in history. But she lost that title in 2022 when the value of her portfolio dipped by almost 20%. She didn’t even make the Top 10 that year. Things turned around for her last year when she made a 66% return on her investments. That’s more than double the S&P 500’s gain. And a big part of that was thanks to 2023’s stock market darling – chipmaker Nvidia (NVDA). Securities filings showed the Pelosis bought $2 million worth of Nvidia call options in late 2023. That played a big role in Pelosi’s performance for the year. But it’s not the only tech stock she made money on. She also owns millions of dollars’ worth of Microsoft and Apple stock, which both rose by around 55% last year. It’s not surprising that Pelosi’s district includes Silicon Valley. She was set to reap strong returns as tech stocks soared thanks to the artificial intelligence boom and the Federal Reserve’s pause on interest rate hikes. And that’s a problem… When Lawmakers Become Moneymakers It’s not just about making trades or booking big gains. Members of Congress are also quite skilled at steering clear of losses. We saw plenty of that in 2023. Take the banking crisis, for example. There were a number of well-timed transactions by Congress members, many of whom sat on committees overseeing the financial industry. Some – like Rep. Lois Frankel – sold bank stocks just before those stocks took their biggest hits. Frankel sold First Republic Bank on March 16. That move saved her from the 80% collapse that followed as First Republic was liquidated. On March 17, Rep. Nicole Malliotakis made a purchase of New York Community Bancorp (NYCB). Two days later, NYCB announced that it was acquiring Signature Bank. The stock price of NYCB surged by 30% following the news. Here’s why that’s a problem. If elected officials can trade in sectors tied to their work, it’s a sign that our government is broken. This goes back to something I’ve said many times: Anyone can own and trade shares. But not everyone makes laws, meets with corporate lobbyists, and decides how taxpayers’ money should be spent. The good news is we don’t need to sit on the sidelines while these politicians line their own pockets. We can follow where their money is going… and take advantage of it. Later, we’ll dive into the sectors and individual companies at the core of Congress’ investments. And I’ll show you how you, too, can trade like a politician. Regards, [signature] Nomi Prins Editor, Inside Wall Street with Nomi Prins --------------------------------------------------------------- Like what you’re reading? 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