Honest Work

I’ve always assumed that members of Congress are involved in insider trading. The idea seems obvious. They are privy to information that the public are unaware of and have the ability to beat the market without consequences. So to test this, I pulled 30,300 disclosed stock trades by sitting members of Congress spanning 14 years and benchmarked them against the S&P 500. This research report sparked my curiousity to dig deeper.

Highlights

• Congress underperforms the S&P 500 on average, only 44% of buy trades beat the index at 90 days.
• Committee-overlapping trades outperform non-overlapping trades by +4.21 percentage points at 180 days. They’re the only group that actually beats the market.
• Built a Conflict of Interest Score for each member based on how often they trade in sectors they regulate.

Tech Stack

• Python + Polars - Data pipeline
• yfinance - Historical stock prices
• Capitol Trades, Senate Stock Watcher, QuiverQuant - Trade disclosure data, cross-referenced
• Matplotlib - Charts

Notes

• The committee-to-sector mapping was the hardest part. No clean crosswalk exists between Congressional committees and GICS sectors, so some judgment calls were unavoidable.
• STOCK Act disclosures are messy. Trades reported up to 45 days late, position sizes in broad ranges, ~15% of tickers delisted and unrecoverable.
• The 2020 spike is wild. It’s the only year where Congress clearly beat the market.
• If a hedge fund analyst had these numbers in one sector, the SEC would have questions. Congress just has to file a form.

Check it out: Honest Work