So... We Aren't Even Trying To Hide it Anymore?

0:00 Earlier this week, the president announced on True Social that there had

0:03 been productive talks with Iran to deescalate the situation in the region,

0:06 which inferred a loosening of shipping traffic in the street of Hermuz,

0:10 which in turn meant the potential for lower oil

0:12 prices and a more positive outlook on financial markets.

0:14 Now, putting to the side for a second that these productive

0:18 talks may or may not have happened at all.

0:20 What actually got people's attention was

0:22 that just 16 minutes before this announcement,

0:23 there was a huge spike in futures trading within these markets.

0:27 clearly suggesting that someone on the inside knew what

0:29 was about to happen and was profiting off it.

0:32 Depending on the details of the trades,

0:34 this mystery speculator could have made as much

0:36 as $60 million within the span of 20 minutes.

0:39 But perhaps this isn't surprising to you anymore.

0:41 Insider trading has effectively become the expectation in Washington

0:44 at this point as everyone from senior elected

0:47 officials all the way down to junior public servants

0:50 consistently outperform the top hedge funds on the planet.

0:53 It's not great, but well, people have just become numb to it.

0:57 These days, it's barely worth reporting on.

1:00 It's obviously immoral at best and borderline treasonous at worst.

1:03 But at this point, we know nothing is going to be done about it.

1:07 And with everything else going on, it is easy

1:09 to assume that in the grand scheme of things,

1:11 this isn't actually hurting us individually as much

1:13 as everything else in the economy at the moment.

1:15 Most people don't really have stock investments worth worrying about.

1:18 And even if they did,

1:20 it's hard to see the impact this kind of cheating actually has.

1:24 This disheartening indifference is part of what makes

1:27 this week's lucky trade in particular so interesting.

1:30 People actually cared about it.

1:31 And there were probably two reasons for this.

1:34 First, it was happening in a market that was clearly hurting them right now.

1:38 Someone making life-changing amounts of money

1:40 speculating on oil prices just inherently doesn't

1:42 sit right while most people are struggling to put gas in their cars.

1:46 The second was simply how brazen it was.

1:48 The only reason we even know this happened at all was because whoever they are,

1:53 they made trades with hundreds of millions of dollars

1:55 in notional value within the span of just 60 seconds.

1:58 And they did it 15 minutes before the market altering announcement.

2:01 The point is that if this was insider trading,

2:04 they didn't even have the common decency

2:06 to spread their trades out over a few hours.

2:09 If they did, there is a good chance we would never even know.

2:12 Instead, they are literally giving us the bird with trading volume.

2:15 Now, this particular example may be infuriating,

2:17 but if there is some good that may come of it,

2:21 it is showing that this happens all the time.

2:23 The insiders are usually just a little bit better at hiding it.

2:26 Looking back at a few of the key changes that have enabled

2:29 what should be shameful behavior to become so blatant is the first step,

2:33 but this itself also raises some much more important questions like,

2:37 well, how much money has actually been made off political insider trading?

2:41 And more importantly, how much is all of this actually costing you?

2:45 Now, should members of Congress be allowed to trade stock?

2:48 Well, a bipartisan group of lawmakers says no

2:50 to ban members of Congress from trading stocks.

2:53 We heard from Representative Tim Burchett of Tennessee before the first

2:56 hearing on this in the House in more than 3 years.

2:59 spike in oil prices overnight really suggests that markets believe this conflict

3:03 could last longer than initially in expected and there are plenty of reasons

3:08 for that over the weekend in terms of escalatory rhetoric by the US

3:12 and we uh still have this restriction on the movement of oil and gas.

3:17 So if you pay attention to a lot

3:19 of market moving announcements you will notice that a lot

3:21 of them follow a similar pattern and once

3:23 you see it it becomes pretty hard to ignore.

3:26 On Friday, the 23rd of May, the White House announced 50% tariffs on EU goods,

3:30 sending panic into the markets that had already closed for the night.

3:34 Then on the 25th of May, the tariffs were delayed and the language softened,

3:37 resulting in a massive rebound.

3:39 The indefinite suspension of Mexico tariffs were announced on a Monday morning,

3:43 while a new 100% tariff on Chinese goods were announced on a Friday night.

3:47 Strikes on Iran started late on Friday here in America

3:50 and the military operation in Venezuela was either late

3:53 on a Friday night or early on a Saturday morning

3:55 depending on what side of the country you were on.

3:58 Then of course the market rally this week was driven by the announcements

4:02 about deescalating the uh ongoing situation that was first started on a Friday.

4:06 All of these are also just examples from the last 12 months.

4:10 The blindingly obvious pattern is that good

4:12 news announcements will be made on Monday morning, right before markets open,

4:16 and bad news will be buried at the end

4:18 of the week after markets have already closed.

4:20 Now, this isn't actually anything new or even that partisan either.

4:24 Before the 24-hour news cycle, it was simply considered good politicking to dump

4:29 bad news on a Friday afternoon after newsrooms had

4:31 submitted their prints and leaving enough time that it

4:34 would be old news on a Monday morning.

4:36 But today, as the market has become

4:37 a live updated indication of national competence,

4:40 for some reason, these incentives have clearly

4:43 shifted in ways that are directly profitable.

4:45 Every single one of the major announcements listed

4:48 in this video so far came with suspicious corresponding trades.

4:51 And this has only become easier for two reasons.

4:54 The first is that bet on everything markets utilizing

4:57 cryptocurrencies have made it easier to well bet on everything.

5:01 In the past, if you had privileged knowledge about most events,

5:04 it was difficult to actually turn that into a profit on financial markets.

5:08 These platforms have also made these bets harder to track for those people

5:11 who are important enough to be entrusted with some insider knowledge,

5:14 but are not yet important enough to be above the law.

5:17 The second reason is that Washington is simply creating

5:20 more market moving noise than it ever had before.

5:23 Just from a financial perspective,

5:24 government spending now represents a higher share of GDP in a given

5:28 year than it did at the height of the Second World War.

5:31 Even beyond that, while we may have become desensitized,

5:33 massive stimulus measures, global trade altering tweets,

5:36 and Fed policy meetings getting hundreds of thousands

5:39 of live viewers is really not normal.

5:41 And more so than ever before,

5:43 financial performance is very closely tied to government decisions.

5:46 A study published by the International Review of Economics and Finance

5:49 found that financial instability was marketkedly

5:51 higher when Congress was in session.

5:53 And it also found that this was when they did a vast majority of their trading,

5:57 which was a surprise to well, absolutely nobody.

6:00 And well, yeah.

6:01 The third reason is probably exactly what you already were thinking,

6:05 which is that even for the individuals who have

6:08 been identified as clearly abusing their positions for personal profit,

6:11 the punishments have been very light.

6:12 both from a legal perspective and in terms

6:14 of how much it affects their chances of re-election.

6:17 Again, people have become so numb to this that for a lot of outlets,

6:21 it's barely worth reporting on.

6:22 In fact, I will admit that I almost fell into the same trap.

6:26 When this market activity started gaining attention,

6:28 I almost brushed it off as simply being business as usual.

6:31 But then something changed.

6:32 People actually gave a[ __] The attention

6:36 this particularly egregious insider trade is

6:37 getting is a great excuse to shine a spotlight on the wider problem

6:41 to show just how much these games are making for the people

6:44 that play them and to work out how much this is all costing you.

6:48 So, it's time to learn how many works to find

6:51 out why aren't they even trying to hide it anymore.

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7:55 All right, so one of the reasons why people may be so ambivalent

7:58 about things like congressional stock trading

7:59 is because it doesn't clearly impact them.

8:01 A vast majority of shares and other financial assets

8:04 in our economy are already owned by already very wealthy households,

8:07 large institutions, or foreign investors.

8:09 The kind of front-running insider trading

8:11 that has allowed Congress to effectively

8:13 double the return of the stock market might be a zero- sum game,

8:17 but the indirect losses the market bears to fund their gains are spread out over

8:20 a lot of people who probably won't feel it in the grand scheme of things.

8:25 Now, this is not to excuse this behavior,

8:27 but instead it is to show why it's become so easy to ignore,

8:30 but just tracking the data,

8:32 or at least the data we are actually allowed to see by going

8:35 back through Stock Act disclosures can give us some really interesting insights.

8:39 The first and perhaps most important point

8:41 in this data is that active traders in Congress,

8:43 as in people who are frequently buying and selling

8:46 assets or using complex financial instruments like derivatives,

8:49 are in the minority.

8:50 At least from the official disclosures,

8:52 most house reps and senators largely have buy

8:54 and hold portfolios with the occasional trade here

8:57 and there that wouldn't really be considered outside

8:59 the ordinary for most relatively wealthy career professionals.

9:01 Now, that might sound like I'm devil's advocating a bit here,

9:05 but it's actually the opposite.

9:07 It instead shows that the outperformance in congressional stock trades

9:10 are largely driven by a small group of extremely active traders.

9:14 In fact, most of these elected officials actually

9:16 did worse than the market as a whole.

9:18 According to the data that has been disclosed from 2025,

9:21 just under a third of congressional portfolios outperformed the S&P 500,

9:25 but that was the same year where Congress as a whole was

9:28 up over 20% above the already strong returns of the broad market.

9:31 In plain English, what this means is that there are a few dozen

9:35 elected officials who are making absolute

9:36 bank and pulling up the average considerably.

9:38 Congress as a whole on average is now making over 10,000 trades a year,

9:43 largely concentrated amongst just a handful of people.

9:46 The median number of trades made by a congressperson was just three,

9:49 raising the question of how these other people have time to do anything else.

9:54 Now, I know this goes against the narrative that all of them are in on it,

9:57 but that's actually a good thing.

9:59 It shows that people who are clearly gaming the system are a minority

10:02 and that we can actually hold these officials to a higher standard.

10:06 But before you get too optimistic,

10:08 remember this is still a how money works video.

10:10 So the second thing we found when we compiled this data

10:13 is who those Congress members making all of this money actually were.

10:16 The reality is that it was largely more senior

10:19 Congress people who were sitting on lots of committees.

10:21 And almost every year since these disclosures were introduced,

10:24 the party that has controlled the House outperformed the party

10:27 that was in the minority on their stock trades.

10:29 These special committees give them access to even

10:31 more information than they would get as regular lawmakers,

10:34 letting people like Nancy Pelosi trade in Nvidia while shaping the chips

10:38 act or Tommy Tuberville dabbling corn

10:40 futures while serving on the Agricultural Committee.

10:42 Now, mercifully, much smarter people than me at the National Bureau

10:45 of Economic Research actually found

10:47 the same trend to corroborate these findings.

10:49 The study revealed that lawmakers generally perform similar

10:51 to their peers until they are put into a leadership role,

10:55 at which point they outperform their peers by 47 percentage points on average,

10:58 which in the world of investing is an unfathomably large gap.

11:03 In 2025, these insiders again considerably outperform

11:06 the market and their peers in Congress.

11:08 The only people from this group to actually lose money were Chip Roy,

11:11 who got absolutely hammered on a single energy stock and has

11:15 since become a major advocate of limiting congressional stock trading,

11:18 and Mitch McConnell, who reported a net trading loss of 1.8% in the year.

11:22 And that is probably the closest I will ever get to defending Mitch McConnell.

11:26 Oh, yeah.

11:27 And the third thing we found out when pouring through

11:29 this data is that even though it is technically publicly available,

11:31 they have made it about as difficult as humanly possible to find.

11:35 The user interface that you need to use in order to find disclosures looks

11:38 like it was straight out of the 1990s

11:40 and the information is presented very unintuitively.

11:42 Throw on some low poly gifs and you can almost hear the dialup tone.

11:47 Again, for a law passed in 2012.

11:50 Now, thankfully, if you don't feel like

11:51 subjecting yourself to this, you can also find

11:53 a lot of this information on third party websites that track this data as well.

11:57 So, I will leave a link to that below.

11:59 Unfortunately, the reason that there are so many third party

12:02 tools that track this data so closely is because, well,

12:05 people just try to make money by copying the trades of their elected officials,

12:10 which is not great, but at least it gives us some user-friendly transparency.

12:14 Finally, of course, the Stock Act only

12:16 applied to members of Congress and their staff.

12:19 It doesn't include the president,

12:20 cabinet members, or other highranking officials,

12:22 and it certainly doesn't include the off-the-book transactions like

12:25 the one that inspired this video in the first place.

12:28 But even still, from what we know, how much is all of this actually costing us?

12:33 Well, collectively, from what has been legally disclosed,

12:35 Congress specifically only does about a billion dollars

12:38 worth of trading volume in a single year,

12:40 which is clearly an insane amount of money

12:42 for a totally random representative cross-section of our country.

12:45 But it's also not enough to meaningfully move markets by itself.

12:49 The real cost, of course,

12:50 is how these financial incentives alter their decision-making.

12:53 Is someone on the agricultural committee going to propose

12:56 policy that helps farmers but hurts their corn futures?

12:58 Will someone who owns millions of dollars

13:00 worth of Nvidia bail out the AI industry?

13:02 And is it worth undermining trust in our geopolitical

13:05 channels to make a few million on oil futures?

13:08 These decisions impact how much we pay in interest,

13:11 the validity of our trade deals, and the strength of our currency.

13:14 Our economic uncertainty index is now higher than it

13:17 has been at any point outside of the pandemic,

13:20 which just on our debt alone means we need to offer higher interest

13:23 rates to offset the increased risk that now comes with lending to America.

13:27 This has more than doubled our interest repayments over the past 5 years alone.

13:31 Something that we are all eventually going to pay through higher taxes,

13:35 higher inflation, or just good old-fashioned economic default.

13:38 Again, this is also just one avenue where

13:41 this political self-s serving is coming back to bite us.

13:44 Is insider trading exclusively responsible for our debt risk premium?

13:47 Of course not.

13:48 But it does mean that there are direct financial incentives not to fix it.

13:51 But if you want to know how much worse this particular problem can get,

13:55 go watch this video next to find out why we haven't had a debt crisis yet.

13:59 And don't forget to like and subscribe to keep on learning how money works.