Like any other trader, James Comer is always looking for a bargain.
Comer, a Republican congressman from Kentucky, picked up some of the biggest names in the tech sector recently, according to a Jan. 10 filing.
The past month was a good time to pick up tech stocks as they'd slumped (although the Nasdaq composite (^IXIC) jumped on Jan. 15 after a weaker-than-expected inflation report).
December was the worst month since April for the S&P 500 (^GSPC) and the Nasdaq, CNN reported on Dec. 31, citing data from FactSet, as selloffs in tech stocks dragged the indexes lower.
Comer's choices included computer giant Apple (AAPL) , the world's most valuable company, and AI-chip superpower Nvidia (NVDA) , the second most valuable company.
"Congress outperformed because they invested mainly in big tech," the group said in its Congress Trading Report. "If you look at the increases in portfolio values, performance, or stock returns individually, they did incredibly well."
Unusual Whales said that many of the stocks that Democrats and Republicans bought in big tech were from previous years. And the group said that the representatives advanced legislation — from President Joe Biden's Chips Act to the TikTok divest-or-ban bill — that would help these companies and support various tech-related initiatives.
Despite a turbulent start in 2024's financial markets, Capitol Hill investors' trading activity last year was significant, with 9,942 stock trades reported, the platform Capitol Trades reported. These included 5,139 investment trades and 4,767 sell trades.
Apple was the top choice for congressional traders, followed by Microsoft (MSFT) and JPMorgan Chase (JPM) . Microsoft also topped the sell list, with lawmakers trimming positions due to profit-taking or growth concerns. Alphabet (GOOGL) ranked second in sales activity, and Apple placed third.
Software was the most popular sector, driven by advancements in AI and global economic shifts. This sector attracted the highest trading volume, underscoring its dominance in investor strategies.
Semiconductors and semiconductor equipment followed, driven by stellar performance, with the banking sector rounding out the top three.
Nevertheless, despite strong performance, the semiconductor and software sectors saw significant selling as investors locked in gains, while the banking sector recorded notable divestments amid market uncertainties, Capitol Trades said.
Voters want tighter restrictions on Congress's trading
Clearly, voters are not very happy about all this congressional stock-picking.
Overwhelming bipartisan majorities favor prohibiting stock trading in individual companies by members of Congress, the president, vice president and Supreme Court justices, according to a 2023 survey by the Program for Public Consultation at the University of Maryland’s School of Public Policy.
Criticism of stock trading by members of Congress while they are in office is hardly new, but the issue was given new life with accusations of members making lucrative purchases of pharmaceutical stocks based on inside information about Covid-19 vaccines, the university said in a statement.
“While the prospect of a stock trading ban is controversial within Congress, public support approaches unanimity,” said Steven Kull, director of the Program for Public Consultation within the public-policy school at UMD.
The most popular argument favoring the prohibition on members asserts that there are “too many potential conflicts of interest when members of Congress can hold and trade stocks in individual companies."
Some limits on Congress trading are in place
There are some limitations on congressional stock trading.
In 2012 former President Barack Obama signed into law the Stop Trading on Congressional Knowledge, or Stock, Act.
The Stock Act prohibits Congress members from using material nonpublic information for private profit — commonly known as insider trading — and requires them to report trades within a certain time frame.
But the Campaign Legal Center, a watchdog group, said members of Congress actively involved in trading stocks fail to disclose the trades in a timely manner, leading to "a widespread, bipartisan trend of ethics violations."
"Penalties for this behavior, governed by an opaque system, are rare and nominal," the group said on its website. "Consequently, members aren't deterred from future violations."
Some congresspeople seem to be getting the message.
On Jan. 14 U.S. Representatives Dusty Johnson (R-South Dakota), Chip Roy (R-Texas) and Seth Magaziner (D-Rhode Island) reintroduced the bipartisan Trust in Congress Act, which would prohibit members of Congress, their spouses, and dependent children from trading individual stocks during their time in Congress.
The Trust Act, formally the Transparent Representation Upholding Service and Trust in Congress Act, requires members of Congress, their spouses and dependent children to place stock investments in a qualified blind trust until 180 days after the end of their tenure in Congress.
“Most Americans agree that congressmen should be banned from buying stocks,” Johnson said in a statement.
“As members of Congress, we may have access to information regarding companies and markets, and we absolutely should not have the ability to use this information for personal gain," he said.
