Congressional Stock Trading in 2022: A Year of Scrutiny and Unusual Gains

An analysis of publicly available financial disclosures by Unusual Whales, a stock and options news service, found that a quarter of Congress actively traded over $788 million in various assets through over 12,700 transactions in 2022.

While the number of transactions in 2022 was similar to the previous year, the total value of the trades decreased. The top sectors for stock investments among Democrats were technology services, electronic technology, finance, consumer services, and health technology. Among Republicans, the leading sectors were technology services, industrial services, miscellaneous, finance, and electronic technology.

The analysis results indicate that Congress outperformed the S&P500, which was down 18% in 2022. Moreover, this trend held regardless of the method of calculation, including a secondary analysis in which politicians' trades were compared to the S&P500 ETF (SPY) performance over the same period.

Notably, the top political traders in 2021 were not necessarily the top traders in 2022. However, several politicians made unusual trades that resulted in significant gains. The report also identified coinciding trades with Committee decisions or large bills, raising questions about the potential for insider trading.

One of the top performers was Republican Pat Fallon, who saw a return of 51% on his trades in 2022. In contrast, the Pelosis, known for their investment activity, saw a decline of nearly 20%. In addition, many of their deep-in-the-money options plays expired at a loss.

The release of the 2022 Congressional Trading Report by Unusual Whales sparked public outrage and calls for a ban on stock trading by politicians. In response, several lawmakers drafted proposals for such a ban, and 27 politicians immediately signed on in support. In addition, the House Administration Committee held a hearing on Congressional stock trading practices and cited the work of Unusual Whales. Despite these efforts, politicians are still currently allowed to trade stocks.

The full report, which can be found at https://unusualwhales.com/politics/article/congress-trading-report-2022, delves further into the trading activity of individual politicians and offers an analysis of the success of their strategies.

The 2022 Congressional Trading Report highlights the continued need for transparency and accountability in the financial activities of politicians. In addition, the disproportionate success of Congress in outperforming the market, despite challenging conditions, raises questions about the potential for conflicts of interest and insider trading. These issues must be thoroughly examined and addressed to maintain the trust and confidence of the public in our democratic institutions.