'Killing it': Rookie investors are mirroring Congress' stock trades
A new stock trading app is allowing small-time investors to buy and sell the exact same stocks that members of Congress do — often with high rates of success.
Chris Josephs, who cofounded the app Autopilot, told ABC News that he noticed a pattern of high-raking government officials consistently beating the odds when trading stocks, calling it "infuriating." He set out to develop the app as a way of allowing users to automatically buy and sell any stock that a particular member of Congress does, at whatever dollar amount they choose.
"The reason why we initially set out with the politicians is because they were killing it," Josephs said. "They were making a lot of money."
POLL: Should Trump be allowed to hold office again?
Even though former President Barack Obama signed the STOCK Act — a 2012 law preventing members of Congress from trading off of privileged information — current law still allows lawmakers to trade stocks provided the transaction is reported within 45 days. Former Sen. Kelly Loeffler (R-Georgia) famously took advantage of this rule, making millions off of stock trades by selling in industries that would be adversely impacted by the Covid-19 pandemic, and buying in industries that took off during that same time period. The wife of Sen. Rand Paul (R-Kentucky) made a similar trade with curious timing, like buying shares of a pharmaceutical company's stock that eventually ended up manufacturing coronavirus treatment drugs.
"You're like, ‘what the, wait, how are they allowed to do it when other Americans can’t?’" Josephs told ABC News.
Social media account Unusual Whales, which boasts 1.5 million followers on X (formerly Twitter), tracks the investment patterns of members of Congress. The administrator of the account, who spoke anonymously to ABC News, said that the crash and subsequent bailout of Silicon Valley Bank came after lawmakers who sat on committees regulating the banking industry sold stock in the company.
"One thing people always say is that members are very good at picking stocks, that's often assumed…but to be quite frank, members were also quite good at avoiding losses," the administrator said. "[M]any of the members who were trading banking stocks during that time performed very, very well."
READ MORE: Bipartisan House bill introduced to ban congressional stock trading
Earlier this year, Reps. Brian Fitzpatrick (R-Pennsylvania), Matt Gaetz (R-Florida), Raja Kirshnamoorthi (D-Illinois) and Alexandria Ocasio-Cortez (D-New York) introduced the bipartisan Restoring Faith in Government Act, which would halt all congressional stock trading. The bill has yet to pass out of its respective committee and GovTrack gives it a 5% chance of passage.
