Nancy Pelosi’s annual congressional salary is $223,500. Yet, she has a total net worth of approximately $135 million according to CAKnowledge.com. In terms of wealth, this puts the U.S. Speaker of the House on par with athletes, actors, and celebrities. In fact, she’s well ahead of people like Chris Rock ($60 million), Cam Newton ($75 million), or Jamie Lee Curtis ($60 million). So, since she only earns about $200k per year, where does Nancy’s immense wealth stem from? Well, a good portion of it comes from conveniently-timed trades in the stock market. Most recently, she made a $3.5-million-dollar trade on Nvidia stock.
Nancy’s Nvidia Trade
Note: Technically speaking, Nancy Pelosi does not buy her own stocks. Her husband, Paul Pelosi, buys them via his venture capital firm Financial Leasing Services.
A recent congressional stock trading report shows that Nancy Pelosi exercised 200 Nvidia call options (20,000 shares) on June 17th at a strike price of $100. With a current stock price of $178/share, this position is now worth over $3.5 million dollars. Nvidia stock is up over 12% since Nancy placed this trade. What’s interesting about this particular trade is that it was placed just weeks before Nancy voted to pass a major bill.
Right now, the House of Representatives is in the midst of passing a $52 billion semiconductor bill. This bill is designed to make the U.S. more competitive against China when it comes to creating semiconductor chips. Guess which company will be a major beneficiary of this bill? That’s right. Nvidia.
In mid-July, Nancy announced that she would be backing the bill and also stated that she wants to get the bill passed before the House breaks for recess in early August. This statement came just weeks after she purchased 20,000 shares in the company.
If the bill passes, Nvidia will likely rake in billions in government funds which could lead to an improved stock price.
So what’s the big deal?
Insider trading in the United States is illegal. Investopedia defines insider trading as “trading a company’s stock when you have non-public, material information about that stock for any reason.”
For example, it is illegal for the CEO of a company to sell shares of stock if they know something bad is going to happen before that news is made public. For more on this, just check out Martha Stewart’s Wikipedia page.
You could definitely argue that Paul Pelosi, whose wife is one of the most powerful women in the U.S., is privy to insider information. After all, nearly every couple discusses their work day over dinner. It would be particularly naive to imagine that Paul Pelosi and his wife didn’t discuss a particular $52 billion semiconductor bill prior to buying millions of dollars worth of stock in a top semiconductor company.
This is also not the first conveniently-timed trade that Nancy has made. It’s just the most recent. Her stock trading activity has gotten so much attention that there are even Twitter accounts that follow and report on it.
With that said, congressional trading is also not just a Nancy Pelosi issue. As the Speaker, she’s just one of the more visible traders. In reality, dozens of congressmen trade stocks all the time. Most of them do so quite successfully.
Additionally, not all members of Congress are on-board with this self-dealing style of behavior. Josh Hawley, for example, recently introduced legislation to ban congressional stock trading. But, it remains to be seen if it will actually gain any momentum.
A silver lining
If there’s one silver lining in all of this, it’s that self-serving politics can actually be a good sign.
So far in 2022, the S&P 500 has been in and out of bear territory. At some points, it has been down over 20%. But, if Nancy Pelosi is loading back up on stocks, it might be a sign that the market could be starting to turn around. It’s reasonable to think that she wouldn’t be buying stocks if she still expected a serious recession ahead.
Remember, sometimes it’s best to ignore what people are telling you and, instead, watch what they’re doing.
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