[dpflan]

Essentially, what information are they privy to that public is not? What asymmetry exists (timing, un-public information)? Is there any way for the public to be nearly as informed? What are they trading on? Upcoming funding changes (more money here -> buy, less money there --> sell)? COVID impact stands out.

[dccoolgai]

Most "big" projects (huge chip foundries, etc.) require various forms of government approval (if not outright funding). They get asymmetry from knowing:

1. Sometimes that the project is happening before everyone else 2. If the project will or will not be approved or stopped e.g. in committee 3. Various other classified things like Dept of Defense briefings (if the Army says it needs XYZ component and plans to buy 10 billion worth of them, then buy the company that makes XYZ component).

[thayne]

It isn't necessarily that they have information the public doesn't (although it could be that, they would know about policy changes before the general public does). It could also be that they use their leadership position to push forward policies that benefit stocks that they own.

[fwip]

This could even happen for non-selfish reasons. If you genuinely believe that, e.g, "The future of America is BigTech," you'll both favor tech stocks in your portfolio and be more sympathetic to their lobbyists and favored bills.

[adabyron]

There are 3 things always overlooked in this conversation.

- It’s not just representatives but their staff, family and friends. See the Covid scandals as an example.

- Often the information they’re privy to can come from their networks outside of government. The current transparency laws give us insights into their family members’ investments which is incredibly beneficial public knowledge.

- The current laws have no teeth and are not enforced well. Immediate disclosure should be required & automated for elected representatives, judges, family & staff within 24 hours. Late reporting should be immediate sale and loss of any profits.

[seanmcdirmid]

If you compared Pelosi to other investors in San Francisco, you wouldn’t see much of a difference. Anyone who has gone heavy into tech in the last couple of decades has outperformed the market at considerable risk of going broke if there was a tech bust. Compare Facebook or Google to an index fund, especially before index funds decides to go heavy into FAANGs.

People who make/have more money also have more appetite for risk and also in general make more returns. Even without insider trading, being able to take a lopsided position on tech with the expectation that if it loses you still have a comfortable life, that is how the rich become richer.

[phkahler]

That doesn't explain why persons in leadership positions outperform other members of congress. Presumably they all talk to each other and could share trading strategies. There's no reason not to unless your strategy involves inside information that might get you in trouble if spread around.

[seanmcdirmid]

It actually does, if you believe that the people in leadership positions have been earning money for longer and have more experience in investing. You could also easily argue that they are more successful in general than congress people of similar tenure who aren't in leadership positions.

You are basically comparing the CEO to middle layer management, and then what do you expect? You need to do a more balanced comparison than that to show an actual discrepancy. Or maybe get congress to dole leadership positions out at random and then compare?

[bumby]

I’m not defending congressional trading, but there are potentially other confounding variables (emphasis on potential). Leaders may tend to be older, have more appetite for risk, or leadership may correlate with wealth/status because “the connected” can also raise more money etc etc. Unless those types of variables are controlled for, it should temper how strongly we draw conclusions.