Investors spend countless hours solving the mystery of how to beat the stock market – and many lose millions of dollars in the process.
But the answer could be simple: just copy Congress.
A tool that copies trades made by members of Congress and their families has gained nearly 20 percent this year, performing twice as well as the stock market average of eight to 10 percent.
And a separate tool designed to track Nancy Pelosi's investments shows that her portfolio has returned a remarkable 50 percent over the past 12 months, easily outperforming the 17 percent gain of the benchmark S&P500 index of America's top companies .
The tools were created by Quiver Quantitative, which uses public disclosures from members of Congress to reflect their trading activities and track results.
A tool that copies investments made by members of Congress and their families has risen 20 percent in the past 12 months. The green shows that the Congress tracker has significantly outperformed the S&P500 since April 2020, represented by the gray line.
A separate tool focused solely on Nancy Pelosi's portfolio shows her investments are up about 50 percent over the past 12 months. Pelosi's investments are illustrated by the blue line, while the gray line shows the performance of the S&P500 over the same period
Pelosi's portfolio has outperformed the broader stock market by a wide margin, and Quiver Quantitative estimates she has “earned nearly 100x her congressional salary from her trading.”
The revelations show that some politicians have shown an almost prophetic ability to invest in companies just days before their stock prices explode. Some sit on congressional committees connected to the company in which they have invested.
James Kardatzke, CEO of Quiver Quantitative, told DailyMail.com: 'You can almost certainly see cases where people appear to be trading on information they may have received in committee meetings, or that they have received just based on the nature of the events. their job.”
Quiver Quantitative has singled out several trades for their success. None of the members of Congress have been charged with insider trading.
The transactions highlighted by Quiver Quantitative include the purchase of up to $115,000 worth of Lockheed Martin stock by Representative Scott Franklin on September 12, 2022.
Franklin, a member of the House Committee on Appropriations, which regulates government spending, bought shares in the defense company weeks before it reported better-than-expected earnings thanks to demand for F-35 fighter jets.
The stock price rose 18 percent on news of the company's financial results, which were released on October 18, 2022, resulting in a profit of up to $20,000 on Franklin's initial investment.
Franklin's spokesman told DailyMail.com that he is not personally involved in stock transactions and has a broker who manages his investments.
They said: 'He has instructed the broker to diversify his portfolio across different sectors of the economy to spread investment risk.
'His broker has unilateral control over which shares to buy or sell and in what amounts.'
The tracker added Tesla shares in May after Congressman Josh Gottheimer (left) and Senator Tommy Tuberville invested in the automaker. Within weeks, the stock rose 64 percent
Representative Mark Green bought $250,000 worth of NGL Energy stock on March 24. Shares are up 70 percent, and Quiver Quantitative estimates that Green “made more money from his NGL Energy trading than he did from his congressional salary this year.” '
On May 15, the tool added Tesla stock to its portfolio after purchases by politicians including Senator Tommy Tuberville and Representative Josh Gottheimer.
The stock price subsequently rose by 64 percent in just 36 days. The tracker has sold its Tesla shares after selling shares by Gottheimer and Tuberville, Quiver Quantitative said.
In a third example, Representative Mark Green purchased $250,000 worth of NGL Energy stock on March 24. Since then, shares have risen 70 percent.
The documents show that Green has since bought several more shares in the company – in trades worth hundreds of thousands of dollars – and Quiver Quantitative estimates that Green “has made more money from his NGL Energy trading than he has this year from his congressional salary earned'. years'.
Quiver Quantitative's separate tracker for Nancy Pelosi's trading activity is up about 50 percent since last December.
Pelosi has benefited enormously from this year's huge gains in the stock price of Nvidia, the chipmaker whose valuation has surpassed $1 trillion thanks to the AI boom.
Pelosi also owns millions of dollars worth of shares of Microsoft and Apple, both of which are up about 55 percent since the start of the year.
Rep. Gottheimer said in a statement to DailyMail.com: “Before coming to power, I transferred the management of my retirement savings and investments to a third party, which has complete investment freedom. During my time in Congress, decisions regarding my managed investments were made at the direction of that third party.”
A spokesperson for Tuberville said: “Senator Tuberville has long had financial advisors who actively manage his portfolio without his day-to-day involvement.”
The offices of Pelosi, Green and Franklin did not immediately respond to requests for comment.
Kardatzke said it is difficult to say with 100 percent certainty that transactions are “inappropriate or someone is engaging in insider trading.”
Pelosi has benefited this year from huge gains in the stock price of Nvidia, the chipmaker whose valuation has passed $1 trillion. She also owns millions of dollars worth of shares of Microsoft and Apple, both of which are up about 55 percent since the beginning of the year.
“By following what members of Congress are doing, you can gain insights you might not find anywhere else when it comes to how a company might perform in the future [and] how they might be influenced by the government,” he said.
He said the tools are also crucial to help improve accountability and transparency.
“Our hope is that sometime in the near future there will be better regulation of stock trading in Congress, and possibly even a ban on members of Congress from trading stocks.
“Obviously I think the more people pay attention to this data and the more people call out members of Congress when they're acting in suspicious or inappropriate ways, the sooner that's likely to happen,” he said.
Current rules allow members of Congress to trade stocks freely, but they must report their trading and they may use nonpublic information to inform their purchases.
But the fine for lawmakers who break the rules is typically only $200.
Earlier this year, Democratic Senator Kirsten Gillibrand and Republican Senator Josh Hawley formally introduced the Ban Stock Trading for Government Officials Act, which would ban members of Congress, the president, the vice president and other White House officials – along with their relatives – would prevent them from trading in shares.
But Kardatzke added that while much legislation has been introduced to curb the practice, few ever come to a vote.
He said his company was “surprised at how consistent” the profits of the stocks chosen by Congress were.
Gottheimer's statement said he has supported bills to tighten rules around trade through Congress, adding, “I do not believe that members of Congress, judges, or any government official should be involved in a policy role in daily trading. of securities, including cryptocurrencies.”