3-Sentence Summary:
- Politicians are some of the best stock traders in the country, with many democrats and republicans beating the market in 2022.
- New ETFs like $NANC and $CRUZ now let you track and copy political trades.
- By investing in these ETFs, you can essentially match the trades that politicians are making.
$KRUZ & $NANC
If there’s one thing that our politicians can agree on, it’s that they should be allowed to actively trade stocks of public companies while in office. While both Ds and Rs accuse each other of being the villain, political trading is largely bipartisan.
If you’re not sure why politicians owning stocks is an issue, consider this:
- Politicians can purchase large quantities of stock in public companies.
- Then, they can pass legislation that directly benefits the companies whose stock they own.
- From there, they can make money from an increase in the stock’s price.
This is an obvious conflict of interest that incentives politicians to act in their own monetary interests, not the interests of their constituents. In the past few years, there have been plenty of examples of politicians engaging in stock trades with curious timing.
For example, many politicians were exposed for dumping stock holdings prior to the covid-19 shutdown right before the market crashed. More recently, a few legislators doubled down on energy and war stocks before the invasion of Ukraine. While awareness about this conflict of interest is growing, there haven’t been any meaningful repercussions.
So, as the saying goes, if you can’t beat ‘em, join ‘em!
You can now track the trades of politicians by investing in exchange-traded funds (ETFs) that track their holdings. Two of the newest ETFs are appropriately named $CRUZ and $NANC.
If you’re interested in following along with political trades, you can also check out Senate Stock Watcher and House Stock Watcher.
How Much Can I Make?
Here are the returns of a few prominent politicians last year, courtesy of Unusual Whales:
As a reminder, the overall stock market returned roughly -18% in 2022 making it one of the worst years on record. At the same time, some of our elected officials are earning 50% returns.
That said, just because politicians have been successful trading stocks in the past does not mean that this year will be as profitable. Additionally, politicians are not required to disclose their stock holdings for weeks after they have made the trade. Timing is crucial with stock investing and, for this reason, we would not recommend mirroring specific trades.
Getting Started
To get started investing like a politician, all you have to do is open a brokerage account and start buying in either of these two ETFs. Or, you can also use Senate Stock Watcher or House Stock Watcher to find out which companies different politicians are invested in. For example, you could examine Nancy Pelosi’s biggest holdings and build a portfolio to match.
Disclaimer: The information provided by Do Not Save Money is for general informational purposes only and does not constitute financial, legal, or tax advice.
Do Not Save Money does not guarantee the accuracy, completeness, timeliness, reliability, suitability, or availability of the information contained on our website or that of any third-party websites we may link to. Do Not Save Money will not be held responsible for any errors or omissions in the information provided or for any loss or damage of any kind arising from or in connection with the use of the information contained on our website. You should seek the advice of a qualified financial advisor or other professionals with any specific questions you may have regarding your financial or legal situation.
Any decisions you make based on the information contained on our website are your sole responsibility and Do Not Save Money will not be held liable for any actions or inactions you take as a result of using the information provided. Please note that the value of investments and any income derived from them can go down as well as up and you may not get back the full amount invested. Past performance is not indicative of future results.
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