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This trading bot buys stocks bought by US politicians; Here’s how it’s doing in 2024

This trading bot buys stocks bought by US politicians; Here's how it's doing in 2024

A significant number of U.S. politicians have gained the reputation for being either Buffett-like stock market prodigies or serial insider traders – depending on whom you ask – and many of them have managed to significantly beat the market on numerous occasions.

Their propensity for perfectly-timed stock purchases and sales is, perhaps, most visible when looking at their performance throughout 2023, which shows that many significantly beat the major benchmarks, and one – New York’s 26th congressional district representative Brian Higgins – had a return rate of 238.9%.

In 2023, the S&P 500 index – a commonly used benchmark for the U.S. market – rose approximately 24%.

Given the politicians’ apparent stock-picking talents, it is hardly surprising that many investors have taken to developing strategies seeking to mimic Congressional market successes.

It is likely that none is as prominent as Quiver Quantitative, most recognizable for commonly sharing suspicious trades on X, which boasts a string of politician-themed strategies.

Beating the market with automated trades

The idea behind Quiver Quantitative’s ‘Congress Buys’ automated strategy is both simple and rather successful. The trading bot simply invests in the 10 most purchased stocks by members of Congress and their families, and it has, since backtesting began in 2020, been widely successful.

In total, the bot has a return rate of 265.29% and boasts a compound annual growth rate (CAGR) of 39.82%.

Since going live in May 2022, it is up 37.90%, while, in the same period, the S&P 500 – the index it uses as a benchmark – is up 21.33%, meaning that U.S. Congress – and the strategy by extension – has been on average, handily beating the market.

Strategy vs S&P 500 performance since going live. Source: Quant Database

In recent weeks, things changed somewhat as U.S. politicians have apparently lost some of their spark. The last 30 days saw the strategy return 3.22%, while the S&P 500 is up 4% in the same period.

Strategy vs S&P 500 in the last 30 days. Source: Quiver Quantitative and Google

Efforts at curtailing Congress

The magnifying glass placed on congressional trades triggered a renewed drive to pass a bill that would either force elected officials to divest or place their assets in a blind trust. 

In the leadup to this latest initiative several earlier similar bills have been proposed and then postponed multiple times.

Out of all postponements, the decision not to vote on the matter that was taken during Representative Nancy Pelosi’s tenure as the Speaker of the House is widely seen as the most egregious, and she – through her husband Paul – is considered one of the most prolific, successful, and suspicious politician-traders in the United States.

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