It takes big bucks to win a seat in Congress.
During the 2022 midterm elections, candidates and political action committees spent nearly $17 billion on state and federal campaigns.
That marks them as the most expensive midterms ever.
Having money flow into Congress is one thing.
But giving legislators time to snuggle into a seat of power is a whole different story… because that’s when they grab real opportunities to grow their wealth.
As I’ve said before, political power is all about the money:
…congressional incumbents stay in power due to the money and corporations backing them… and if you keep your eyes on where this money is originating from, you can have a pretty good idea of which companies will be the government’s winners this year.
So today, in a two-part piece, I will peer behind the closed doors of the House and Senate.… explore the phenomenon of congressional trading… and reveal one investment that legislators are preparing to pour into right now.
It’s Not Just a Pelosi Problem
Representative Nancy Pelosi is the poster child for congressional trading.
Nancy and her financial whiz of a husband, Paul Pelosi, outperformed the market both in 2020 and 2021.
In fact, in 2021 they outperformed the S&P 500 index by a staggering 22%.
This made Nancy Pelosi the single greatest investor in history right next to Warren Buffett.
And it’s for this reason that many people compare her to a market whale, capable of moving entire markets. According to public opinion, she is someone to always watch.
However, in 2022, Nancy’s market-beating performance faltered, with her portfolio dropping nearly 20%, worse than the 18.2% decline in the S&P 500.
Overtrading might have been one of the reasons with the Pelosis executing a total of 31 trades last year. That’s up from 19 trades in the year prior.
In addition, they ran up huge losses in the tech sector.
In fact, the Pelosis lost more money than Nancy’s entire annual salary as the Speaker of the House with their bet on Roblox Corporation (RBLX).
On December 20, 2021, the Pelosis acquired 100 call options in Roblox, each with a strike price of $100 and an expiration date of January 20, 2023.
But, as Roblox shares experienced a significant decline in 2022, the options ended up expiring worthless, leading to a loss of $303,001.
To compound matters, they later sold 5,000 Roblox shares, incurring an additional loss of $235,836 on the trade.
This on top of several other major losses, including $511,000 on Tesla shares, lost Nancy and her husband over $1 million in tech investments in 2022.
Of course, these losses did little to dent their net worth.
With a net worth of around $165 million, Nancy Pelosi is still the third-wealthiest member of Congress. She currently earns a $174,000 annual salary as a member of the House.
Her husband Paul currently has a net worth of $130 million, fluctuating widely with the pricing of his stock and real estate assets.
But here’s the really curious part…
Despite her enthusiastic trading, Pelosi didn’t even make the list of the top 10 in 2022.
So, who did?
Well, the top spot for trading activity goes to Ro Khanna, Democratic House member and self-proclaimed “progressive capitalist.”
His extensive family stock portfolio, primarily registered under his wife and children (even though both children are under 6 years old), accounted for over 5,700 trades, totaling an impressive $151 million.
Ro Khanna, boasting a net worth of $27 million or more, ranks among the wealthiest members of Congress.
The second and third highest volume traders were House Republicans: Rep. Michael McCaul, who conducted over 1,600 transactions amounting to $176 million, and Rep. Diana Harshbarger, who made over 1,000 trades totaling up to $21 million.
Our Government Is Broken
If you’re like most folks, you might wonder how it’s possible that a member of Congress who makes $174,000 per year is also worth over $165 million.
Well, that’s the story of Nancy Pelosi’s 35-year career in Congress. But it’s also a symptom of a much bigger issue, which is that our government is broken.
One hundred and eighty-three members of Congress reported making at least one trade between 2019 and 2021.
Of these 183 members, more than half of them sat on congressional committees that would’ve provided them access to insider information.
But there’s more. As of late, this whole situation has been spiraling out of control.
In 2022, members of Congress traded nearly $400 million worth of stocks. As you can see from the chart below, that was significantly higher (25%) than what they traded in 2021.
That’s despite the 40-year high inflation, interest rate hikes, a bear market, and increased public interest in congressional stock trading. Instead, you can see congresspeople diversified away from riskier assets into government debt and safe securities.
Now, the number of congresspeople that filed financial disclosures in 2022 was down to 131 compared to 147 in 2021. This means that there were fewer officials trading last year.
But it also means that a smaller group of people traded a significantly larger number of stocks. In fact, this amounts to about $3 million worth of shares traded per member, versus $2.16 million in the year prior.
That’s quite impressive when you consider that, unlike the prior year, 2022 was a terrible year for the stock market. In fact, it was its worst year since 2008, with many stocks trading near their multi-year lows.
Plus, the 131 number translates to just under a quarter (24%) of Congress. That’s a lot of people sitting in seats of power… making laws that directly impact certain companies they or their family members might have investments in.
But there’s a silver lining…
If we follow where their money is going, we can take advantage of it.
What This Means for Your Money
Right now, more than 100 congresspeople are preparing to pour their money into one investment…
And that’s because a rare, generation-defining event is about to hit the markets on September 20.
We have only seen something like this three times in the last century, and it’s about to splinter the entire stock market in half… sending everyone’s most loved stocks plummeting.
At the same time, this event will push a select group in a corner of the stock market to all-time highs.
I call it “America’s Secret Stock Panic.” And investors who prepare before September 20 could have the chance to secure a seven-figure nest egg…
While at the same time, unprepared investors could have their portfolios cut in half!
That’s why I’m going on camera tomorrow, August 3 at 10 a.m. ET, to reveal how you can prepare for what’s coming.
I’ll even give away the name and ticker of the top way to play this rare market event, for free. Sign up for the event with one click right here.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins