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In this case was there any "insider information", that could have actually helped her decide in late December that Nvidia call options were a good bet? I don't

by syspec 3y ago

In this case was there any "insider information", that could have actually helped her decide in late December that Nvidia call options were a good bet? I don't think anything changed in regulation, it was just the rise and boom of AI

ganoushoreilly 3y ago
There is a large govt program / collaboration announced with MS, Nvidia, and others it is very likely these talks started late last year. That info that it was in the pipe is enough to trade on.
game_the0ry 3y ago
This is not an anomaly. Pelosi and many others in congress have consistently out performed even the best professional traders over a long period of time. Its not just bc of the AI boom. To think that members of congress do not trade on insider info is naive.
- alphabettsy 3y ago
  Citation needed.
  - godelski 3y ago
    Unusual Whales is a very famous site that tracks politicians Or do you need a citation that members of congress trading based on knowledge they have is not legally defined as insider trading? Because that's also easy to Google fwiw https://unusualwhales.com/politics/article/congress-trading-report-2023 https://unusualwhales.com/politics/article/congress-trading-...
    - alphabettsy 3y ago
      The comment I responded to said that members of Congress consistently outperform professional traders. This doesn’t show that.
      - godelski 3y ago
        I think there's a context gap here. They are referring to congress on average. But the median congress member does not beat SPY. The distribution is highly heterogeneous. Even just looking at number of transactions, half of each party's transactions are performed by a single member of that party. So to translate: > Congress consistently outperforms professional traders to > The average performance of members of congress is higher than that of professional traders. This does not mean a specific member outperforms a specific trader. Though there are specific members who consistently have a performance level that is higher than top traders. Which should beg the question of why these people have such high "skill" levels. This also does not mean there aren't congressional members who lost money in the market (there were 19 actually).
- syspec 3y ago
  Totally agree with all of this. I just feel that this is a bad example which is likely not related to insider trading so it weakens the case made in the article.
  - jessriedel 3y ago
    "Insider trading" refers to trading on confidential information that was entrusted to employees of a company ("insiders"). Pelosi has access to $10B spy satellite images, which is very different.
- jncfhnb 3y ago
  Can you cite a source for this claim? Because everything I see suggests otherwise
  - godelski 3y ago
    https://unusualwhales.com/politics/article/congress-trading-report-2023 https://unusualwhales.com/politics/article/congress-trading-...
    - jncfhnb 3y ago
      I’m not really interested in reading this entire report. This is their first bullet > Congress beat the market, once again. Of 100 trading members, 33% beat SPY with their portfolios. This does not inspire a lot of confidence in their findings. If 33% beat the SPY, then twice as many congress members underperformed. Can you share specific claims that seem relevant?
      - godelski 3y ago
        > Can you share specific claims that seem relevant? I'll admit I'm conflicted here. On one hand, yes, I can and I'd encourage you to just start with looking at the figures since figures say a lot. There's actually not much text and most of the page is figures. But on the other hand, I think there's enough nuance to what's going on that oversimplification can result in a inappropriate dismissal of any claims. Not being a domain expert will only exacerbate any failures to communicate. Certainly the devil is in the details here. FWIW, they do have a tldr. > If 33% beat the SPY, then twice as many congress members underperformed. This being a perfect example. The former does not imply the latter. Nor would the latter imply that there wasn't foul play. First off, there is a third option: matching the SPY. Second, beating the SPY is a proxy metric which is typically used to help identify those that have performed suspiciously well, not those who performed average. It is actually difficult to beat the market, and more so to do it consistently[0]. So I must insist that you use the metric as a guide, not a filter or target. Third: There are many ways to under-perform compared to the market, including not investing. I mention that specific mechanism as one thing the report shows is that there are far fewer filings by Republicans so this is necessary context to properly evaluate some fact like "Democrats beat their Republican colleagues by a massive margin." (Dems ~= 2x Reps in transactions) We must also consider that democrats have fewer members and that >50% of each party's transactions originate from a single member of that party (Ro Khanna (D) and Michael McCaul (R)). There are also multiple vehicles for wealth generation so while stocks should be of interest, it shouldn't be used as the only evidence of manipulation and/or foul play. Fourth: consider what information is marginalized by the metrics. Pareto distribution should be expected, and it is even observed. You must therefore be considerate of aggregates as variance is high (difference between mean and median is large). But I will give you some TLDRs. The report goes into nuance because the claim of insider trading is reliant upon details: - Top 10 returns, in order are: Brian Higgins (D-NY: 239%), Mark Green (R-TN: 122%), Garret Graves (R-LA: 108%), David Rouzer (R-NC: 106%), Seth Moullton (D-MA: 80%), Ron Wyden (D-OR: 79%), John Rutherford (R-FL: 69%), Richard Blumenthal (D-CT: 68%), Nancy Pelosi (D-CA: 66%), Peter Sessions (R-TX: 63%). SPY returns ~=25%. 32 members beat SPY (50/50 split by party) (Note: Higgins holds $100k in NVDA, purchase was from 2021, no sales have been recorded) - 19 congressional members had negative returns, 13 being Republicans. - Kevin Hern (R-OK) stands the most to gain via stocks that correlate with war. 4 of the top 5 most incentivized are Republicans, the other is Pelosi in 4th. Follows power law distribution. - They have a breakdown by transactions that align with members that serve on relevant committees (this is where detail matters and stronger evidence of foul play is drawn from). I would suggest reading or at least giving a quick read rather than relying on me to accurately summarize it for you. Especially if you think there is a bias. I'm sure you can carve out 15-30 minutes if this is actually a topic you care about. If not, I might suggest ensuring your confidence in your existing model appropriately aligns with your domain expertise and time dedicated to becoming informed on the subject. [0] https://www.nytimes.com/2023/04/14/business/stock-market-2022.html https://www.nytimes.com/2023/04/14/business/stock-market-202...
- bc569a80a344f9c 3y ago
  > Recent news reports and a Department of Justice investigation highlight the potential for insider informed trading by U.S. Senators and Members of the House of Representatives, an activity which the STOCK Act of 2012 was intended to deter. We use a new and comprehensive data set of these officials’ trades of public equities from January 2012-December 2020. We find no evidence of superior investment performance whether we look in aggregate or at Senators specifically accused of informed trading. Over a six-month horizon, stocks bought by House Members underperform on average by 26 basis points, while stocks sold underperform by 11 basis points. Even at the 95th and 99th percentiles of ex-post stock returns, House and Senator stock returns are consistent with random stock picking. Our methods cannot rule out the existence of some insider trades that are masked by the means, masked by poor ex-post performance or that took place in earlier years. https://www.sciencedirect.com/science/article/pii/S0047272722000044 https://www.sciencedirect.com/science/article/pii/S004727272...
psychlops 3y ago
ChatGPT was introduced to the world 8 days later after her purchase of calls. Could be coincidence.
- Jtsummers 3y ago
  > ChatGPT was introduced to the world 8 days later after her purchase of calls. Could be coincidence. This investment was made on November 22nd 2023. ChatGPT had been around for a while before then, it was not introduced 8 days later.
  - fragmede 3y ago
    Specifically, it was launched November 30th, 2022.
- mulmen 3y ago
  ChatGPT was released on November 30, 2022 which was 357 days before this trade. https://en.wikipedia.org/wiki/ChatGPT https://en.wikipedia.org/wiki/ChatGPT
AnotherGoodName 3y ago
Her husband runs an investment firm so the information here was probably simply detailed analysis, down to the estimated orders per customer and the details of supply chain costs and margins. So not at all unexpected and no need for inside information. That's one thing that people don't seem to get when they look at stocks at a superficial level. Nvidia's rise was entirely expected. A quote among many - "We’re shocked by Nvidia’s pricing power on AI chips that we see driving earnings upside, higher valuation" - Apr 2023 when the price was less than half it is now and that statement was 100% correct yet the thread i'll link has a tone of conspiracy theories that it's a lie. https://old.reddit.com/r/stocks/comments/12rbhs8/nvidia_stock_pops_on_hsbc_upgrade_were_shocked_by/ https://old.reddit.com/r/stocks/comments/12rbhs8/nvidia_stoc... In fact in superficial analysis land (aka retail investors making trades on past history and PE alone) there were posts on reddit that Nvidia at half the current price was a great shorting opportunity as their PE was high. https://www.reddit.com/r/stocks/comments/12c6sbx/nvidia_nvda_is_the_best_riskreward_short_over_the/ https://www.reddit.com/r/stocks/comments/12c6sbx/nvidia_nvda... I still can't believe just how bad the retail investor community is. They don't go into any detail on companies. No view of the incoming orders and costs. They don't look at the long standing declines in userbase (there's non stop "Paypal is undervalued" threads on Reddit right now despite the constant user decline), they do superficial analysis and make poor decisions and when they see someone do well on investing through diligence they scream conspiracy. So Nancy Pelosi, and more specifically her investment banker husband did well on this trade? No shit. They probably did some level of homework.
hanniabu 3y ago
She knew about a government contract they'd be getting
jessriedel 3y ago
As Speaker of the House and 2nd in line to the presidency, she had access to more classified information than almost anyone on the planet. These sorts of officials should only be invested in blind trusts or diversified index funds, as indeed the president and vice president usually are.
- godelski 3y ago
  I'm not sure that solves the issue so much as funnels the direction of manipulation. Supposing a bad actor is trying to generate wealth but under such constraints, all they need to do is write policy in favor of the companies that already dominate. Such as favoring Apple, Microsoft, Google, and even Nvidia. Could even be done if one flattens the distribution of funds one would typically find in an index fund. See VOO for example, and play the imaginary game where you are a bad actor who wants to maximize your wealth but all your investments are locked up in VOO. It's important to play this game (run that simulation).
  - jessriedel 3y ago
    It is dramatically more constrained.
    - godelski 3y ago
      I recognize that (actually made a longer comment in main thread), and I'm not convinced that's strictly in the public's interest. You are essentially placing a filter of "you must be this rich to bribe politicians." This could "counterintuitively" empower the already powerful even further, as you decrease their competition. To perform market capture they must capture a critical mass of politicians (we'll say mass varies by each politician's power). While there's already an implicit filter for those high mass politicians (fat cats ;) -- since you accumulate mass quickly -- the system's robustness is through the distribution of power among politicians. The whole political structure is designed to make it difficult to capture enough mass, and this is identical to the argument against authoritarian systems. So the constraining effectively reduces competition and can actually make mass accumulation cheaper and easier for companies that have the highest potential (and incentives) for abuse. So unless you got a counter argument that can convince me that this is of no concern, then I'm sticking to my original position.

by syspec 3y ago

ganoushoreilly 3y ago

There is a large govt program / collaboration announced with MS, Nvidia, and others it is very likely these talks started late last year. That info that it was in the pipe is enough to trade on.

game_the0ry 3y ago

This is not an anomaly. Pelosi and many others in congress have consistently out performed even the best professional traders over a long period of time. Its not just bc of the AI boom. To think that members of congress do not trade on insider info is naive.

alphabettsy 3y ago
Citation needed.
- godelski 3y ago
  Unusual Whales is a very famous site that tracks politicians Or do you need a citation that members of congress trading based on knowledge they have is not legally defined as insider trading? Because that's also easy to Google fwiw https://unusualwhales.com/politics/article/congress-trading-report-2023 https://unusualwhales.com/politics/article/congress-trading-...
  - alphabettsy 3y ago
    The comment I responded to said that members of Congress consistently outperform professional traders. This doesn’t show that.
    - godelski 3y ago
      I think there's a context gap here. They are referring to congress on average. But the median congress member does not beat SPY. The distribution is highly heterogeneous. Even just looking at number of transactions, half of each party's transactions are performed by a single member of that party. So to translate: > Congress consistently outperforms professional traders to > The average performance of members of congress is higher than that of professional traders. This does not mean a specific member outperforms a specific trader. Though there are specific members who consistently have a performance level that is higher than top traders. Which should beg the question of why these people have such high "skill" levels. This also does not mean there aren't congressional members who lost money in the market (there were 19 actually).
syspec 3y ago
Totally agree with all of this. I just feel that this is a bad example which is likely not related to insider trading so it weakens the case made in the article.
- jessriedel 3y ago
  "Insider trading" refers to trading on confidential information that was entrusted to employees of a company ("insiders"). Pelosi has access to $10B spy satellite images, which is very different.
jncfhnb 3y ago
Can you cite a source for this claim? Because everything I see suggests otherwise
- godelski 3y ago
  https://unusualwhales.com/politics/article/congress-trading-report-2023 https://unusualwhales.com/politics/article/congress-trading-...
  - jncfhnb 3y ago
    I’m not really interested in reading this entire report. This is their first bullet > Congress beat the market, once again. Of 100 trading members, 33% beat SPY with their portfolios. This does not inspire a lot of confidence in their findings. If 33% beat the SPY, then twice as many congress members underperformed. Can you share specific claims that seem relevant?
    - godelski 3y ago
      > Can you share specific claims that seem relevant? I'll admit I'm conflicted here. On one hand, yes, I can and I'd encourage you to just start with looking at the figures since figures say a lot. There's actually not much text and most of the page is figures. But on the other hand, I think there's enough nuance to what's going on that oversimplification can result in a inappropriate dismissal of any claims. Not being a domain expert will only exacerbate any failures to communicate. Certainly the devil is in the details here. FWIW, they do have a tldr. > If 33% beat the SPY, then twice as many congress members underperformed. This being a perfect example. The former does not imply the latter. Nor would the latter imply that there wasn't foul play. First off, there is a third option: matching the SPY. Second, beating the SPY is a proxy metric which is typically used to help identify those that have performed suspiciously well, not those who performed average. It is actually difficult to beat the market, and more so to do it consistently[0]. So I must insist that you use the metric as a guide, not a filter or target. Third: There are many ways to under-perform compared to the market, including not investing. I mention that specific mechanism as one thing the report shows is that there are far fewer filings by Republicans so this is necessary context to properly evaluate some fact like "Democrats beat their Republican colleagues by a massive margin." (Dems ~= 2x Reps in transactions) We must also consider that democrats have fewer members and that >50% of each party's transactions originate from a single member of that party (Ro Khanna (D) and Michael McCaul (R)). There are also multiple vehicles for wealth generation so while stocks should be of interest, it shouldn't be used as the only evidence of manipulation and/or foul play. Fourth: consider what information is marginalized by the metrics. Pareto distribution should be expected, and it is even observed. You must therefore be considerate of aggregates as variance is high (difference between mean and median is large). But I will give you some TLDRs. The report goes into nuance because the claim of insider trading is reliant upon details: - Top 10 returns, in order are: Brian Higgins (D-NY: 239%), Mark Green (R-TN: 122%), Garret Graves (R-LA: 108%), David Rouzer (R-NC: 106%), Seth Moullton (D-MA: 80%), Ron Wyden (D-OR: 79%), John Rutherford (R-FL: 69%), Richard Blumenthal (D-CT: 68%), Nancy Pelosi (D-CA: 66%), Peter Sessions (R-TX: 63%). SPY returns ~=25%. 32 members beat SPY (50/50 split by party) (Note: Higgins holds $100k in NVDA, purchase was from 2021, no sales have been recorded) - 19 congressional members had negative returns, 13 being Republicans. - Kevin Hern (R-OK) stands the most to gain via stocks that correlate with war. 4 of the top 5 most incentivized are Republicans, the other is Pelosi in 4th. Follows power law distribution. - They have a breakdown by transactions that align with members that serve on relevant committees (this is where detail matters and stronger evidence of foul play is drawn from). I would suggest reading or at least giving a quick read rather than relying on me to accurately summarize it for you. Especially if you think there is a bias. I'm sure you can carve out 15-30 minutes if this is actually a topic you care about. If not, I might suggest ensuring your confidence in your existing model appropriately aligns with your domain expertise and time dedicated to becoming informed on the subject. [0] https://www.nytimes.com/2023/04/14/business/stock-market-2022.html https://www.nytimes.com/2023/04/14/business/stock-market-202...
bc569a80a344f9c 3y ago
> Recent news reports and a Department of Justice investigation highlight the potential for insider informed trading by U.S. Senators and Members of the House of Representatives, an activity which the STOCK Act of 2012 was intended to deter. We use a new and comprehensive data set of these officials’ trades of public equities from January 2012-December 2020. We find no evidence of superior investment performance whether we look in aggregate or at Senators specifically accused of informed trading. Over a six-month horizon, stocks bought by House Members underperform on average by 26 basis points, while stocks sold underperform by 11 basis points. Even at the 95th and 99th percentiles of ex-post stock returns, House and Senator stock returns are consistent with random stock picking. Our methods cannot rule out the existence of some insider trades that are masked by the means, masked by poor ex-post performance or that took place in earlier years. https://www.sciencedirect.com/science/article/pii/S0047272722000044 https://www.sciencedirect.com/science/article/pii/S004727272...

psychlops 3y ago

ChatGPT was introduced to the world 8 days later after her purchase of calls. Could be coincidence.

Jtsummers 3y ago
> ChatGPT was introduced to the world 8 days later after her purchase of calls. Could be coincidence. This investment was made on November 22nd 2023. ChatGPT had been around for a while before then, it was not introduced 8 days later.
- fragmede 3y ago
  Specifically, it was launched November 30th, 2022.
mulmen 3y ago
ChatGPT was released on November 30, 2022 which was 357 days before this trade. https://en.wikipedia.org/wiki/ChatGPT https://en.wikipedia.org/wiki/ChatGPT

AnotherGoodName 3y ago

Her husband runs an investment firm so the information here was probably simply detailed analysis, down to the estimated orders per customer and the details of supply chain costs and margins. So not at all unexpected and no need for inside information. That's one thing that people don't seem to get when they look at stocks at a superficial level. Nvidia's rise was entirely expected. A quote among many - "We’re shocked by Nvidia’s pricing power on AI chips that we see driving earnings upside, higher valuation" - Apr 2023 when the price was less than half it is now and that statement was 100% correct yet the thread i'll link has a tone of conspiracy theories that it's a lie. https://old.reddit.com/r/stocks/comments/12rbhs8/nvidia_stock_pops_on_hsbc_upgrade_were_shocked_by/ https://old.reddit.com/r/stocks/comments/12rbhs8/nvidia_stoc... In fact in superficial analysis land (aka retail investors making trades on past history and PE alone) there were posts on reddit that Nvidia at half the current price was a great shorting opportunity as their PE was high. https://www.reddit.com/r/stocks/comments/12c6sbx/nvidia_nvda_is_the_best_riskreward_short_over_the/ https://www.reddit.com/r/stocks/comments/12c6sbx/nvidia_nvda... I still can't believe just how bad the retail investor community is. They don't go into any detail on companies. No view of the incoming orders and costs. They don't look at the long standing declines in userbase (there's non stop "Paypal is undervalued" threads on Reddit right now despite the constant user decline), they do superficial analysis and make poor decisions and when they see someone do well on investing through diligence they scream conspiracy. So Nancy Pelosi, and more specifically her investment banker husband did well on this trade? No shit. They probably did some level of homework.

hanniabu 3y ago

She knew about a government contract they'd be getting

jessriedel 3y ago

As Speaker of the House and 2nd in line to the presidency, she had access to more classified information than almost anyone on the planet. These sorts of officials should only be invested in blind trusts or diversified index funds, as indeed the president and vice president usually are.

godelski 3y ago
I'm not sure that solves the issue so much as funnels the direction of manipulation. Supposing a bad actor is trying to generate wealth but under such constraints, all they need to do is write policy in favor of the companies that already dominate. Such as favoring Apple, Microsoft, Google, and even Nvidia. Could even be done if one flattens the distribution of funds one would typically find in an index fund. See VOO for example, and play the imaginary game where you are a bad actor who wants to maximize your wealth but all your investments are locked up in VOO. It's important to play this game (run that simulation).
- jessriedel 3y ago
  It is dramatically more constrained.
  - godelski 3y ago
    I recognize that (actually made a longer comment in main thread), and I'm not convinced that's strictly in the public's interest. You are essentially placing a filter of "you must be this rich to bribe politicians." This could "counterintuitively" empower the already powerful even further, as you decrease their competition. To perform market capture they must capture a critical mass of politicians (we'll say mass varies by each politician's power). While there's already an implicit filter for those high mass politicians (fat cats ;) -- since you accumulate mass quickly -- the system's robustness is through the distribution of power among politicians. The whole political structure is designed to make it difficult to capture enough mass, and this is identical to the argument against authoritarian systems. So the constraining effectively reduces competition and can actually make mass accumulation cheaper and easier for companies that have the highest potential (and incentives) for abuse. So unless you got a counter argument that can convince me that this is of no concern, then I'm sticking to my original position.