Politicians Are "Good" At Trading Stocks

It's Friday, May twenty ninth. Yesterday, the Pentagon announced a 9.7 billion dollar contract with Dell Technologies. That same day, financial disclosures showed that President Trump had purchased between one and five million dollars in Dell stock back in February, when the stock was trading around a hundred and twenty six dollars a share. Nine days after that purchase, Trump appeared at a White House event and told the audience to "go out and buy a Dell computer." The stock is now above three hundred and twenty. The White House says the trades are automated and the president doesn't direct them. Maybe so. But this story got me thinking about something broader that I've been watching for a while now, which is that the people who write the laws that move stock prices are allowed to trade the stocks those laws move. And they are, by the numbers, absurdly good at it. I belong to a stock club, and I'll be honest with you: I've bought stocks specifically because a politician bought them. I was telling my friend Dom about this one company I picked up purely because I saw it in a congressional disclosure filing. I didn't know anything about the business. I just figured, this person sits on a committee that regulates this industry, and they're buying the stock, so maybe they know something I don't. I'm up about a hundred and seventy percent in seven months. That's not investing. That's following someone who might have better information than you, and it works way more often than it should. I'm not the only one doing this. There are now entire platforms built around tracking what politicians buy and sell. Unusual Whales publishes an annual report on congressional trading. There are two actual ETFs you can invest in, one called NANC that tracks Democratic lawmakers' portfolios and one called KRUZ that tracks Republicans. The fact that these products exist tells you everything about how normal this has become: retail investors have decided that following politicians' trades is a legitimate strategy, and the returns suggest they might be right. Nancy Pelosi's household portfolio returned fifty four percent in 2024. The S&P 500 returned about twenty five percent that same year. Her five-year annualized return is roughly 22.8 percent, compared to about twelve percent for the index. That means she outperformed the market by about ten percentage points per year, every year, for five years. She beat ninety seven percent of professional hedge funds in 2024. Her portfolio has outperformed Warren Buffett's Berkshire Hathaway, and we just did a whole episode on why Buffett is considered the greatest investor who ever lived. And Pelosi isn't alone. Dozens of members of Congress from both parties outperformed the S&P 500 in 2024, according to Unusual Whales. Marjorie Taylor Greene bought thousands of shares of Tesla that soared in value as Elon Musk became a key advisor to the incoming administration. The pattern crosses party lines, which is the one thing both parties seem to agree on: the right to trade stocks while holding the power to move markets. The fact that we even know about these trades is because of the STOCK Act, which Congress passed in 2012 after reports surfaced that lawmakers had made suspiciously well-timed trades during the 2008 financial crisis, buying and selling stocks based on information they received in classified briefings about the impending collapse. The STOCK Act requires members of Congress to disclose any stock trade worth over a thousand dollars within thirty to forty five days. The idea was transparency: if lawmakers are going to trade, at least the public should be able to see what they're buying and selling. The problem is that the law has almost no enforcement mechanism. The penalty for filing your disclosure late is two hundred dollars. Two hundred dollars. For context, the average congressional salary is a hundred and seventy four thousand dollars a year, and Pelosi's net worth is estimated at over two hundred and sixty four million. A two hundred dollar fine for late disclosure is not a deterrent. It's a parking ticket, and not even a particularly expensive one. Multiple efforts to ban congressional stock trading entirely have failed. Senator Jon Ossoff (AH-soff) and others have introduced bills that would require lawmakers to divest from individual stocks or place their holdings in blind trusts. The bills keep dying in committee, which is the legislative equivalent of a conflict of interest about a conflict of interest. The people who would have to vote to ban their own trading keep deciding not to vote on it. Biden endorsed a ban during his presidency but Congress never acted. Trump, whose own financial disclosures show over 3,600 trades in the first quarter of 2026 alone, has not called for one either. The issue polls overwhelmingly in favor of a ban, with surveys showing over eighty percent of Americans supporting it. Eighty percent of the public wants it. Congress doesn't. So it doesn't happen. The Trump-Dell situation is the newest and most extreme version of this dynamic, because it involves the presidency rather than Congress, and the stakes are proportionally larger. Here's the timeline. On February tenth, Trump's investment accounts purchased between one and five million dollars in Dell stock. On February nineteenth, nine days later, Trump praised Dell at a public event, calling it a "great product" and telling people to buy Dell computers. The public didn't learn about the stock purchase until the disclosure was filed months later. In the meantime, Michael Dell and his wife had pledged 6.25 billion dollars to help fund Trump's signature "Trump accounts" program. Michael Dell sits on Trump's Council of Advisors on Science and Technology, which advises on policy related to the economy, national security, and emerging technologies. And on Wednesday, the Pentagon awarded Dell a 9.7 billion dollar, five-year contract to provide Microsoft software across the entire US military. The White House says the president's investments are managed by independent third-party institutions and that Trump doesn't direct individual trades. JD Vance dismissed concerns by saying the president doesn't sit in the Oval Office on a Robinhood account buying stocks. That's probably true, literally. But the president's investments are not in a blind trust, which means he can be aware of what's in his portfolio even if he's not placing the trades himself. And the sequence of events, buy the stock, praise the company, award the contract, is exactly the kind of pattern that conflict of interest laws were designed to prevent. The catch is that the president is explicitly exempt from those laws. Congress wrote the conflict of interest statute so that it applies to every federal employee except the president and vice president. The contrarian case is worth hearing out, because it exists and it's not entirely unreasonable. If you ban politicians from owning individual stocks, you're asking them to divest from assets that might represent a significant portion of their net worth. You're also assuming that blind trusts actually work, when the evidence suggests that politicians often have a general sense of what's in their trust even if they don't control individual trades. And there's a practical question about whether a ban would just push the activity into spouses' accounts, children's accounts, or other vehicles that are harder to track. Paul Pelosi, not Nancy, is technically the one making the trades in their household. A ban on congressional trading might just move the trades one step sideways. But the counterargument is simpler and, I think, stronger. No other job in America lets you trade stocks in the industries you regulate. If a pharmaceutical executive bought stock in a competitor and then voted to approve a merger that benefited that competitor, they'd go to prison. If a bank employee traded on nonpublic information about a client, they'd be charged with insider trading. Congress members sit on committees that receive classified briefings about upcoming legislation, regulatory changes, and government contracts, and then they trade in the companies affected by those decisions. Whether or not any individual trade crosses the legal line into insider trading, the structural incentive is identical: you have information the public doesn't, and you're allowed to act on it. So if this comes up in conversation, here's how to think about it. Members of Congress are allowed to trade individual stocks while serving in office, and their portfolios consistently outperform the market by wide margins. Pelosi's household returned fifty four percent in 2024, beating ninety seven percent of hedge funds. The STOCK Act requires disclosure but the penalty for noncompliance is two hundred dollars. Multiple bills to ban the practice have died in committee. Meanwhile, President Trump executed over 3,600 trades in a single quarter, purchased up to five million dollars in Dell stock before a 9.7 billion dollar Pentagon contract was awarded to the company, and is exempt from the conflict of interest laws that apply to every other federal employee. Eighty percent of Americans want a ban on political trading. The people who would have to pass that ban are the same people who benefit from the current system. That's the whole problem in one sentence. Have a good weekend. Stay informed, stay curious, and we'll see you Monday.