Chief Investment Strategist, The Freeport Society
On this fine Monday afternoon, after hours in the air – again! – and a quiet day of… reflection?… in the markets, let’s talk about something going on in the hallowed halls of our government.
Members of Congress use “insider knowledge” to trade and invest in the stock market. That is, they’re using information not accessible to the public to pad their bank accounts.
And, not at all surprisingly, this fine group of men and women best known for lying, cheating, and stealing their way to power are quite good at trading on insider information.
In 2023, 33 of the 100 members of Congress who reported their financial transactions as required by the STOCK Act of 2012 beat the S&P 500, which was up 24%.
Of course, trading on inside information is illegal. People who get caught go to jail. You and I would go to jail.
The U.S. Securities and Exchange Commission recently slapped criminal charges on Tyler Loudon of Houston after he made $1.76 million in illegal profits trading on information he’d overhead from his wife, who was a mergers and acquisitions manager. He now faces up to five years in federal prison. And his wife divorced him.
Does that mean government officials are above the law?
Of course not!
Lest they be accused of impropriety above and beyond the usual bribery or solicitation of call girls, our noble representatives in Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act of 2012. It ostensibly prohibits members of Congress and other federal employees from using nonpublic information for private profit.
Our representatives must be stock market geniuses because their returns haven’t dropped off over the decade that followed. Or maybe… just thinking out loud here… the STOCK Act didn’t actually stop insider trading by Congress.
Now, as free-thinking, justice-seeking Americans, there’s not a lot we can do about this situation. We can’t divorce our government (and that’s a pity because it really feels like a loveless marriage). We can’t report the wrongdoers to the officials. (What are they going to do? Slap themselves on the wrist?)
Luckily for us, the STOCK Act requires members of government to report their financial transactions.
With the November presidential election approaching rapidly, political insiders are frantically buying particular stocks to set themselves up for massive profits once the results are announced.
It’s time to follow suit.
So we’ve pulled together the 99 stocks that political insiders are buying before the election.
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To life, liberty, and the pursuit of wealth.