politics
Welcome to the discussion of US Politics!
Rules:
- Post only links to articles, Title must fairly describe link contents. If your title differs from the site’s, it should only be to add context or be more descriptive. Do not post entire articles in the body or in the comments.
Links must be to the original source, not an aggregator like Google Amp, MSN, or Yahoo.
Example:
- Articles must be relevant to politics. Links must be to quality and original content. Articles should be worth reading. Clickbait, stub articles, and rehosted or stolen content are not allowed. Check your source for Reliability and Bias here.
- Be civil, No violations of TOS. It’s OK to say the subject of an article is behaving like a (pejorative, pejorative). It’s NOT OK to say another USER is (pejorative). Strong language is fine, just not directed at other members. Engage in good-faith and with respect! This includes accusing another user of being a bot or paid actor. Trolling is uncivil and is grounds for removal and/or a community ban.
- No memes, trolling, or low-effort comments. Reposts, misinformation, off-topic, trolling, or offensive. Similarly, if you see posts along these lines, do not engage. Report them, block them, and live a happier life than they do. We see too many slapfights that boil down to "Mom! He's bugging me!" and "I'm not touching you!" Going forward, slapfights will result in removed comments and temp bans to cool off.
- Vote based on comment quality, not agreement. This community aims to foster discussion; please reward people for putting effort into articulating their viewpoint, even if you disagree with it.
- No hate speech, slurs, celebrating death, advocating violence, or abusive language. This will result in a ban. Usernames containing racist, or inappropriate slurs will be banned without warning
We ask that the users report any comment or post that violate the rules, to use critical thinking when reading, posting or commenting. Users that post off-topic spam, advocate violence, have multiple comments or posts removed, weaponize reports or violate the code of conduct will be banned.
All posts and comments will be reviewed on a case-by-case basis. This means that some content that violates the rules may be allowed, while other content that does not violate the rules may be removed. The moderators retain the right to remove any content and ban users.
That's all the rules!
Civic Links
• Congressional Awards Program
• Library of Congress Legislative Resources
• U.S. House of Representatives
Partnered Communities:
• News
view the rest of the comments
So ~~last year~~ earlier this year when this issue was getting a lot of attention, this chart produced by unusualwhales.com was spread around:
Looks kind of bad, right? SPY is being used for comparison, and it's near the bottom of that chart. Look at all those congress critters playing the market and winning! They must be corrupt.
Except that this is a small fraction of the total membership of the US Congress. Out of 435 Representatives and 100 Senators, the 32 members shown here represent 6% of congress, and they have been specifically selected as the top performers. There's nothing exactly wrong with showing them in a chart this way, but it's very important to understand that this means 94% of congress members did not beat SPY. If you have the idea that congress members in general are substantially profiteering from stock trading, that is directly contradicted by the evidence.
OK, so what about these top performers? Are they individually corrupt? How could we know?
If certain members of congress were regularly using their legislative access to earn profit on the stock market, well that should show up in long-term statistics. If they do this a lot, they should be beating SPY consistently, right?
So we can look at the larger chart from the 2023 report:
And then we can compare it with the one from 2022:
And so do we see any correlations? Well, no not really. The names at the top of 2023 are completely different from 2022. Nancy Pelosi actually lost about 20% of her portfololio value in 2022. There are a couple names that appear on both lists but their performance varies wildly from one year to the next.
Obviously 2 years isn't enough data to identify real trends, but at least in this context we can see that you can't really justify the idea that stock trading corruption is common in congress. Only a small fraction of congress members do better than SPY in either 2022 or 2023, and they aren't the same people year to year.
The vast majority of congress members have lower returns than SPY, and that is the only actual trend supported by the data.
I greatly appreciate this data!
And appreciate being corrected on my overstatements.
I get it but beating the market by whatever percentage is not the deciding factor in whether or not you're making an insider trade. I expect lawmakers to follow the same laws as the rest of us.
Statistically, as a group, congress members are doing no better in the market than any average trader, and many of them are in fact doing worse. If you have some evidence that actually shows there is some broad corruption involved (not with one or two, but like with a statistically significant number of them, say >10%) I would be very interested to see it.
Otherwise, you're just making vague implications based on assumptions.
The number of people trading with insider information also isn't a deciding factor in whether it's illegal.
Here's at least one case that's pretty clear cut I feel, so it does happen - https://www.politico.com/news/2024/07/10/democrats-mike-garcia-boeing-stock-00167225
If they're going to say this is a tough rule to follow they're already too far gone and as you said most would do better just buying SPY anyway.
I replied in a different thread but breaking it down YoY is deeply dishonest especially when we had a devastating market performance year. It's also important to remember that stock trading is (mostly) a zero sum game where some cohort of traders having insider information means that everyone else has less potential to make money. It's one of the reasons why insider trading is so illegal... an information cartel would be highly profitable while accelerating wealth inequality.