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Congressional cash: Inside U.S. politicians' stock market triumphs (or not)

politicians' stock market triumphs

In the preceding year, a fascinating financial narrative unfolded within the U.S. Congress, where American congressmen embarked on stock market ventures that not only proved lucrative but also outshone the performance of seasoned investment fund managers. This financial prowess underscored the influential role these politicians played in shaping market dynamics, capitalizing on their unique positions for substantial financial gains. Notably, the highest-performing among them achieved an exceptional return of nearly 240%, highlighting their acumen in navigating the intricate landscape of financial markets.

This captivating story has been meticulously chronicled by Unusual Whales, a portal dedicated to scrutinizing the stock market activities of politicians. The portal's reports have resonated widely in the media, catalyzing legislative changes in six laws related to financial market trading. The platform vigilantly monitors congressmen's transactions, and its comprehensive year-end summary for 2023 covered a staggering 118 names that frequently graced the front pages of newspapers.

In stark contrast to the general population, around 80% of American congressmen reported profits from their forays into financial markets. Democrats emerged as the outperformers, surpassing Republicans both in terms of effectiveness and the sheer volume of transactions. In 2023, Democratic politicians aligned with President Joe Biden's party boasted an average return of 31.18%, whereas Republicans lagged behind with a 17.99% return. Collectively, U.S. congressmen reported approximately 11,000 transactions, with a cumulative value potentially exceeding 1 billion dollars.

The breakdown of stock preferences revealed intriguing patterns. Republican members of the House of Representatives gravitated towards ConocoPhillips, Tyson Foods Inc, Alphabet, and NGL Energy Partners. In contrast, Democrats in the House of Representatives exhibited a penchant for technology companies, favoring stocks from Apple, Microsoft, and Alphabet.

When considering the overall performance, the stock portfolios of congressmen demonstrated a remarkable outperformance compared to the S&P 500 index, boasting a return rate of 24.81% in the past year. Unusual Whales emphasized that these calculations relied on publicly reported transactions and its proprietary registry, offering a real-time snapshot of individual politicians' holdings.

However, the portal acknowledged the conservative nature of its estimates, as many congressmen tended to inaccurately report their transactions to the Office of Ethics. A notable example of this discrepancy was highlighted with Nancy Pelosi, who mislabeled her December transaction on Nvidia stocks, erroneously disclosing it as a put option instead of a call option.

The politician who emerged with the most significant return on investment for the year was Brain Higgins, achieving an outstanding gain of 238.9%. Yet, the luster of this victory dimmed when one considered that Higgins' portfolio exclusively comprised Nvidia stocks, purchased for $100,000 in 2021.

In the second position, Republican Mark Green secured a return on investment of 122.2%. Despite initially shorting the S&P 500 index ETF at the beginning of the year, Green promptly closed the unsuccessful trade, minimizing losses. The third position was claimed by Republican Garret Graves with a return of 107.6%.

However, not all politicians experienced such financial success. Warren Davidson found himself on the other end of the spectrum, with his stock portfolio witnessing a decline of 77%. The drop was attributed to the devaluation of Workhorse stocks by approximately 80% over the previous year. This downturn underscored Davidson's failure to diversify his investments strategically.

The report also shed light on Ro Khanna, a Democratic congressman who distinguished himself with a record number of transactions on the stock market last year—over 4,250 operations, translating to nearly 17 orders per session. Despite the high level of activity, Khanna achieved a commendable return rate of 12.7%.

The financial escapades of Nancy Pelosi, detailed in the Unusual Whales report, added an intriguing dimension to the narrative. Ranking ninth among the best traders in Congress, Pelosi's summer 2022 purchase of Nvidia stocks for millions of dollars raised eyebrows, especially considering the subsequent passage of the semiconductor bill by the Biden administration, significantly boosting the stocks' value.

The revelation prompted Pelosi to sell the stocks at a profit while proposing a bill prohibiting market trading for members of Congress. Regarded as weak and riddled with legal loopholes by Unusual Whales, the bill failed to garner widespread support. Pelosi bided her time and reentered the stock market on December 22, 2022. By the end of 2023, she resumed purchasing Nvidia stocks, achieving a market return of 65.5%.

Another intriguing figure in the report was Republican Senator Thomas "Tommy" Tuberville, who, in August 2023, disclosed holding futures contracts on wheat, corn, soybeans, and cattle worth $250,000. This investment gained additional significance when considering Tuberville's position on the Senate Committee on Agriculture, Nutrition, and Forestry.

Tuberville also engaged in shorting stocks of various technology companies. Despite potentially favorable timing, Unusual Whales' conservative estimates indicated that the senator achieved a 17% return last year, signaling that, despite possessing insider knowledge, he fell short of outperforming the S&P 500.

In conclusion, the financial exploits of U.S. congressmen in 2023 not only showcased their remarkable success in the stock market but also underscored the intricate interplay between political influence and financial gains. The diverse investment strategies, standout performances, and the unveiling of innovative ETFs provide a captivating snapshot of the evolving landscape where politics and finance intersect. As scrutiny continues and new opportunities emerge, the narrative of politicians navigating the markets is sure to remain a compelling aspect of the financial world.


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