While Nancy Pelosi often gets called out as the Congresswoman that knows how to make money day trading based on upcoming legislation and things that only the legislature knows to be ture, she’s hardly the only one that does so. In fact, Congress as a whole beat the S&P 500 in 2021, according to a shocking report from Unusual Whales.
According to that report, 105 members of Congress were involved in over 3,500 trades last year, selling somewhere in the range of $290 million in stocks. Further, 6 members of Congress were involved in over 270 options contract transactions totaling about $140 million, and 19 members engaged in $124 million worth of transactions involving “other securities like private equity funds.” Oh, and 6 members were involved in 25 transactions of cryptocurrencies worth a paltry (by comparison) $500k.
Those figures, again according to the report, represent about a $200 million decrease in total trades but a 5x explosion in Congressional trading of option contracts. Democrats and Republicans traded similar amounts, with Democrats just edging out Republicans, though Senators did trade about 3x more than members of the House.
According to the report, the decrease in trading volume in 2021 is only there because, in 2020, “former Georgia Senators David Perdue and Kelly Loeffler traded a ton in 2020 and actually account for ~$200M in those stock transactions!” Neither is still in Congress, so the change in trading volume just represents their exit.
In any case, how did the massive number of trades go for the 105 legislators that did trade stocks in 2021? Quite well. They beat the market. According to the report:
On average, House Democrats and Republicans had returns at +14.7%. Meanwhile, Senate Democrats were at +15.4% and Senate Republicans just under +13%. Independent Senator Angus King’s two trades yielded a +16.5% return rate (excluded from the charts above).
To compare, we can take the same transaction periods and estimate $SPY returns (ie. instead of trading those tickers, we trade SPY instead). Using this method, SPY returns were found to be only +13.6%.
The producer of the report also tweeted out this helpful graph of who did the best in 2021:
I have just released the full trading report on politicians in 2021.
In short, many beat the market.
They traded more than ever before.
And they made numerous unusually timed trades, resulting in huge gains.
— unusual_whales (@unusual_whales) January 10, 2022
As you’ll notice, some of those that did the best trading stocks are also the ones who have defended Congressional stock trading the most vigorously.
Dan Crenshaw, for example, beat the S&P 500 by quite a healthy margin. When asked about stock trading, he said “If you want only billionaires…to run for Congress…then keep making sure that we can’t raise our pa, that we can’t get a housing stipend, that we have to…pay rent in two different places. That’s fine, if that’s what you want to support, but just keep in mind that no one will run for Congress because you have no way to better yourself.” What he neglects to mention is that members of Congress are paid far, far more than most Americans and receive a healthy stipend after they retire.
Hitting back at Crenshaw’s comment, Lauren Witzke said “The American Government was designed for ordinary Americans to run and hold office. It’s a blatant lie that you have to reap additional financial benefits or be a millionaire to hold public office. What a cancer Crenshaw is.”
He also allegedly didn’t report the trades he made as he should have. As the Daily Caller reports:
Crenshaw reportedly made half a dozen purchases as the CARES Act was in a three-day period between when it passed the House on March 25, 2020 and when former President Donald Trump had signed the legislation on March 27, The Daily Beast first reported. Crenshaw voted in favor of the $2 trillion stimulus package.
The problem with the purchases is that Crenshaw did not disclose the transactions until months after when he corrected the records to add the purchases, which could be in violation of the STOCK Act
But Crenshaw isn’t the only one who has defended Congressional stock trading. Pelosi has done so too. On that subject, she said that members of Congress should be allowed to trade stocks because America is a “free-market economy.”