Invest Like The Richest Members Of Congress To Make Big Returns

One of the great things about being a member of Congress is having power. The more power you have, the more influence you have. And the more influence you have, the more money you can make.

Most senators, representatives, and delegates make a salary of $174,000 per year. However, the speaker of the House makes $223,500 per year. And the president pro tempore of the Senate, majority leaders, and minority leaders in the House and Senate make $193,400 per year.

These are healthy salaries that come with fantastic benefits. But in no way do these types of salaries create mega-millionaires out of members of Congress during their time in office. Instead, it's their outside investments that make them way richer than the average American.

Invest Like The Richest Members Of Congress

Given members of Congress know things the average person doesn't know, it is wise to follow how some of the richest members invest. After all, if you can't beat them, join them!

It's like investing in companies that reject you. I was rejected by so many tech companies in 2011 and 2012 that I was able to amass a comfortable nest egg in just those names alone.

In a recent Periodic Transaction Report, House Speaker Nancy Pelosi’s husband, Paul, placed a bet of up to $6 million on Apple, Amazon, Nvidia, and Alphabet (Google parent) ahead of a House committee ruling on regulating Big Tech power.

Paul Pelosi bought 50 Apple calls on May 21 with a strike price of $100 that expire on June 17, 2022. He also bought 20 Amazon calls that have a strike price of $3,000, which also expire on June 17, 2022. 

On June 18, Paul Pelosi exercised his Alphabet call options giving him the right to buy 4,000 shares at a price of $1,200 apiece. The Alphabet call options were originally purchased on Feb. 27, 2020. 

Paul's strategy of buying options and investing up to $6 million in just four names is extremely aggressive. Below are the transactions that were disclosed in a filing on July 2, 2021.

Nancy Pelosi periodic transaction report that shows her investing in call options

Regular people do not invest $6 million in call options to buy stock. However, when you are likely worth more than $150 million, as Nancy and Paul Pelosi are, perhaps investing $6 million in call options in just four stocks is no big deal.

Of course, Nancy Pelosi's office told the media the speaker has no involvement or prior knowledge of these transactions.

Inside Information Is A Grey Area

If you don't think there's regular pillow talk between Nancy and Paul, I've got an $8 bottle of water to sell you. Oh wait a minute, that's a bad example because bottled water is a ~$300 billion business!

Whenever you tell a married friend a secret, the vast majority of time, they will tell their partner. So if you never want your secret getting out, never say a word about it!

One of the best ways to get rich is to create a marriage partnership where one partner has power and the other partner has capital.

The union of capitalist and politician is perhaps the most powerful combination today for wealth creation. There are plenty of examples from President down to local city government.

Paul Pelosi owns and operates Financial Leasing Services, Inc., a San Francisco-based real estate and venture capital investment and consulting firm. Meanwhile, Nancy has served as a U.S. representative from California since 1987.

With the power to enact legislation, how is it possible for members of Congress not to have inside information?

Their staff members are talking to dozens of people from these companies in order to enact proper legislation. From body language to keywords, members of Congress can make inferences.

How Inside Information Might Spread “Unintentionally”

Black and white insider trading is receiving a tip from someone in the know about something that will happen. You then invest according to the inside information and hope the government doesn't catch you. See billionaire Raj Rajaratnam's case or ex-New York Congressman Chris Collins as examples.

Then there are grey areas of passing along insider information. If you play poker, you know there are some tells in a person's body language without the person saying a thing.

Besides marrying a member of Congress, here are some examples of how inside information can be revealed without directly revealing anything. These types of conversations and interactions happen all the time.

1) Insider Information Gray Area: A Leisurely Tennis Hit

I was playing tennis with this one guy who worked at Trulia back in 2014. He mentioned they were extra busy due to a potential partnership. He didn't say what, but I figured they were probably going to get acquired since there was a race for market share between Zillow and Trulia. Redfin wasn't really a contender back then.

Lo and behold, Zillow ended up buying Trulia for $3.5 billion the next week. I didn't buy the stock, but I could have. Did I have inside information due to a chance encounter? I don't think so.

Related: Use Poor Pricing Estimates By Zillow And Redfin To Your Advantage

2) Insider Information Gray Are: Guiding Without Guiding

Let's say you're in a management meeting with a publicly-traded company. A C-level executive knows the quarter is going great. But of course, he cannot specifically say earnings will likely beat estimates.

Instead, the executive says, “We are seeing surprise robust demand from new regions where we previously did no business. These new regions could one day be our main earnings driver going forward.”

From this statement, you can infer your earnings estimates need to be revised up. And given better-than-expected earnings is usually a strong catalyst for a stock, you buy more stock. Time will quickly tell whether the C-level executive can be trusted or not.

Is this inside information if the C-level executive is telling multiple investors the same thing? Probably not. What if the C-level executive gave a winky wink? Who knows!

3) Insider Information Gray Area: Attending A Party

Let's say you're at a mutual friend's party with unlimited amounts of free alcohol. All of you guys went to business school together so you're all chummy.

You work at a hedge fund. Your business school classmate is the VP of Business Development at some publicly-traded company. You guys are doing shots for old times sake and having a blast!

At 2 am, you casually ask your buddy, “So how's business?”

Without telling any specifics, your buddy says, “Business is doing great! We're planning on expanding into China. To do so, we're looking to partner up with a leading local player.”

The next day, you go to work on analyzing who those partners might be in the industry. There's only two “leading” local players so you invest in both.

As an investor, you have a right to do your research and try to connect the dots.

4) Insider Information Gray Area: A Busy Husband

You're out getting mimosas at Blue Water Grill with your girlfriend. You ask her, “How are you and Bobby doing?” Bobby is a senior lawyer at a publicly traded company.

She says, “Not too good. Bobby has been working late every night for months because they're looking to sell one of their subsidiaries. We never have date nights anymore!”

Given you tell your venture capitalist husband everything, he goes out and buys your friend's husband's company. He knows the subsidiary has been a thorn in the company's side for two years. Any news of its sale, even at a poor price, will likely push the stock higher.

Is it your fault you shared your day with your loving husband? Probably not.

Of Course Politicians Are Aware Of Sensitive Information

Now that I've provided you with some grey area insider information examples, how can you not believe some members of Congress know stock-moving information that you and I don't.

They are talking to reporters who may trade information from their sources for more access in the future. Politicians are also connected to rich and powerful donors who have various interests.

Remember, people are constantly trying to shower politicians with benefits to gain favor. This constant temptation is one of the reasons why we've seen so many politicians fall from grace over the years.

If you live in a building that is also home to the world's best baked cookies, you can't help but eat some cookies yourself. Eventually, someone will find out because your belly starts protruding.

In politics, someone always knows something valuable. This information is used as currency for trade or as leverage for something more.

Wealthiest members of Congress

Buy And Sell What Congress Members Buy And Sell

When I first saw the report about the stock options Paul Pelosi had bought, I was pumped! I've been a long-time shareholder of Apple, Google, and Amazon. Further, I had bought more during this year's dip as reported in, How I'd Invest $100,000 Today.

Unfortunately, I failed to buy Nvidia's stock a couple of years ago, despite attending a house party right behind the CEO's mega-mansion in San Francisco! The CEO is even Taiwanese. It was a clear sign to buy. Oh well.

You probably don't want to base all your investment decisions on how the Pelosis invest. However, their track record of building wealth speaks for itself. If you want to get rich, you might as well at least study how the rich invest.

Pay attention to what members of Congress are buying and selling. It's the same strategy as seeing what some of the best-performing hedge funds are investing in. You can find out by checking their 13F filings online each quarter.

You won't get the initial benefits, since these people and funds have already bought these securities. However, at least you can use this information to help with your investment analysis.

Instead of getting all bent out of shape about the rich and powerful, think of ways you can benefit as well.

You don't need to be an investment guru to get rich investing. You just need to identify those who are smart and who have great access. If you have to pay a fee to benefit from their status and abilities, then so be it.

Resist The Temptation To Trade With Inside Info

Finally, it goes without saying that insider trading is illegal. It's not worth ruining your reputation and your life over money. If you really want to legally conduct insider trading, consider running for Congress instead.

Know the rules. But also know that plenty of people game the system and get to keep on winning. It seems as if society is more accepting of this type of activity so long as more people can participate.

The super-wealthy legally bribe their children's way into elite private universities by donating tens of millions of dollars for a new building. Don't go the half-ass route and bribe sports coaches or admissions officers like the parents did in the Operation Varsity Blues scandal. The top brass want their cut.

The rich and powerful operate under a different set of rules from you and me. Consider investing like the rich and powerful or invest in funds run by the rich and powerful.

Life shouldn’t be so hard for the rest of us.

Invest In Private Growth Companies

Consider investing in private growth companies through a fund. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment. 

One of the most interesting funds I'm allocating new capital toward is the Innovation Fund. The Innovation fund invests in:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!

The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. In addition, you can see what the Innovation Fund is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.

Related posts:

Recommended Split Between Passive Versus Active Investing

If You Can't Beat Institutional Real Estate Investors, Join Them

How Rich Do You Have To Be To Attend The Met Gala?

Readers, where is the flaw in investing the same ways as the richest members of Congress? Do you believe the reports that members of Congress don't know anything more than anybody else? If you're already rich and powerful, why risk your reputation to try and make even more money with privileged information?

For more nuanced personal finance content, join 50,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. Everything is written based off firsthand experience. 

33 thoughts on “Invest Like The Richest Members Of Congress To Make Big Returns”

  1. John and Rosemary

    You forgot about the other big one Nancy and Paul are on, big time. Alliancebernstein. 6.73% dividend yield. Trading symbol (AB). Back up the truck and get yourself some. They did.

  2. The Social Capitalist

    FS, your article points to utilizing your resources fully – esp. noting Congress. The comments are very political and marginally use your article to advance a cause – demonizing Pelosi or advocating term limits, etc.

    The fact is, America was built, even prior to its Revolution on a government that supported business above all else. So, as you say, why not profit from it, or at least the knowledge of it? The key for me is that profits aren’t just funneled to the wealthiest.

    As for term limits, well what does it say about democracy if people can’t choose whom they want or just choose not to vote (10% or less turnout in many elections). Term limits are a part of easy, lazy thinking. And ultimately…. Most areas of the country will continue voting red or blue, the parties will continue to hold the power, and then what will be the next solution?

    But almost all people are simply too lazy to exercise… even their right to vote.

  3. I’ve been following Congress buys/sells for a long time. I despise them, but seriously….hitch your wagon to the success of the rule makers.
    Regarding insider trading: I wish my wife would just give me hints. She works for regulatory approval and doesn’t say anything. I see the stock price move seriously up or down and ask her what’s going on and she keeps quiet. Then news breaks and she says “yeah we’ve been working on that approval and it fell through” or “we got approval for X in Y country”. My take away from seeing the price shift 10%+ days before the news is that a good number of people are trading on insider information.
    My last tidbit is use your friends. I have some that are legal council for big tech companies. I don’t ask for insider info but I have invested based upon their opinion of other legal issues facing other tech companies. If they give me a clear “there’s no way this gets decided for/against this company” I invest accordingly (NOT their company). And it’s worked out well. Utilize your friends knowledge.

  4. I agree that this is a problem. However, I think it’s pretty disingenuous to use Pelosi as an example without also highlighting the egregious acts of insider trading on the other side of the aisle as well.

    The solution is to support politicians who are in favor of passing this bill (note that it was introduced by a Democrat):

    1. Mentioned Raj Rajaratnam and Chris Collins insider trading cases. Both are linked in the article.

      “ Black and white insider trading is receiving a tip from someone in the know about something that will happen. You then invest according to the inside information and hope the government doesn’t catch you. See billionaire Raj Rajaratnam’s case or ex-New York Congressman Chris Collins as examples.”

  5. I find it fascinating that the original intent was for these government positions to be a public service. Being in politics was once a short-term sacrifice for your country or constituents. Now it can be a lucrative life-long career.

  6. I worked for seven years in government relations for a privately held multibillion dollar company. Most of that time I spent in DC representing our company and our entire industry sector promoting favorable legislation and attempting to block unfavorable legislation. I was generally impressed with the character and hard work that elected officials of both parties displayed. I never had any dealings with anyone regarding inside information and trading but when my own company eventually spun off a subsidiary in an IPO all our employees were allowed to invest as much as they wanted at the initial strike price. I knew, from public information, that every single IPO spin off made in the last several years in our industry had made a huge return for those that bought in at the strike price. I scraped up every penny I could find in the two days they gave us to buy in and 90 days later when I was allowed to sell I made a 50% return. That’s pretty good for a three month investment. Sadly, only a handful of employees had any dry powder or ability to generate cash overnight like I did, and I was one of the very few to make money. But that investment had nothing to do with information about our company, it was all based on what similar companies had done previously. It looked like a no lose investment and it was.

  7. “The tragedy in life is not found in failure but complacency. Not in doing too much, but doing too little. Not in you living above your means, but below your capacity. It’s not failure but aiming too low, that is life’s greatest tragedy.” – Benjamin E. Mays

    Perhaps the rest of us are just falling to complacency, and need to ramp up our willingness to blur the lines and walk the “Grey Line” on our path to FI.

  8. I guess I am naive and assumed that there were restriction on investing when someone entered into political office. Interesting conversation. I see that Charles’s mentioned “” in the comments above, are there any other sources that disclose Elected officials trading? I would have thought this would be required public record…

  9. I learned I could get a hair cut again in 2020 after I saw on the news that Nancy Pelosi was getting her hair done a hair salon in SF.

  10. David @ Filled With Money

    This is an interesting investment rationale. I would love to buy those 4 tech stocks…

    How did you get the disclosures filing? I saw the PDF link, but was there a link before that that got you to that PDF link?

    Insider trading laws are BS. If congresspeople insider trade, absolutely nothing happens to them. If ordinary people insider trade… well, that’s “illegal and a hit to your reputation”. Either make it illegal for both or make it legal for both but not one over the either.

  11. I have been trying to look up other members investments and can’t seem to find the links. How would I do that? This is a very interesting article.

  12. Charles Gilman has Pelosi’s recent trades plus tracks multiple others. I agree with those who support term limits as voters will stick with what they are most familiar with. ‘Better the devil you know than the devil you don’t.”

  13. Count-da-Money

    Two words, “Term Limits” and some of this would start to change. We cannot have our elected representatives in office forever as it breeds this type of behavior no matter the party. 12 years should be the limit for anyone in office, period. Wish this was part of the constitution so the people who benefit the most wouldn’t have to vote for a limit in their power, greed and influence….

    1. Dynasties are being created with power and politics and dynasties are being created with fortunes.

      Given they write the rules, it’s only logical for them to write rules in their favor.

      So strategically, do you want to be friend in Congress person or married into a family with power.

    2. Our forefathers never imagined people would go to Congress and stay there slopping at the trough for fifty years (yet when they then die in office there are those who will speak glowingly about their decades of service to the people – Byrd and Thurmond come immediately to mind but there is no shortage in either party).

      Service was intended to be a sacrifice, with these people eager to get back to their flagging farms, plantations, shops, legal practices, etc. as soon as possible afterwards.

      It also should not be possible to have SuperPacs spending money from anonymous donors on a candidates behalf. The Supreme Court should not have equated campaign contributions with free speech, or ruled that corporations should have free speech.

      Politicians shouldn’t be able to spend tens of millions of dollars attaining a position that pays less than 200k. They should not be permitted to spend 65% of their time in office(that we ostensibly pay them for) trying to raise more campaign funds. They are slaves to their political parties for the same reason.

      That gerrymandering has made compromise into a negative thing, rather than the reverse.

      In his farewell address (which is highly readable) George Washington warned us against most of the excesses (and their causes) that we see today. Partisan politicians from both all sides speak of what a giant of a leader he was, then pooh pooh or ignore the best advice he ever gave us.

  14. Bitter to Richer

    It’s definitely not a good idea to trade with insider info – but following trends and investors with a good track record is generally a solid tactic!

    I’m not naive to the nature of how Congress operates, but for some reason I didn’t even think to check what they were investing in. Needless to say, I’ll be doing some research tonight. Of course, I won’t jump in blindly just because congressman X or Y thinks it’s a good idea (it isn’t 100% foolproof after all), but this will be fun to look into and review over time.

  15. I’m not surprised. All these politicians eventually become corrupt.

    Most of the population doesn’t complain mostly because the crumbs in the US are better than the whole pie in other countries. The US is so wealthy that you can become wealthy picking up scraps.

    1. I like that viewpoint.

      And a bull market, so long as you’re making money, you’re more tolerant of the rich and powerful making even more money. That’s when things go to hell, and you’re losing money, and it’s no longer tolerable.

      Because they are still rich and powerful.

  16. If you think that political donations are a leading indicator of political benefits to companies, someone has already set up funds that track the companies that donate to each party. This is similar to what the article here is describing. DEMZ is the one for Democrats and MAGA for Republicans.

  17. Yet time and time again, Pelosi gets reelected. Unfortunately as many of us have realized, power breeds corruption so it really does not matter who gets elected. AOC is a great example – she came to power with the stated goal of helping the poor (rather or not one agreed with her positions is not important), yet now she has profited handsomely from Netflix deals, etc.

    1. AOC got a lucrative Netflix deal? Had no idea.

      I’m sure AOC will get a multi-million book deal advance when she goes that route.

      Only rational for popular politicians to capitalize on their positions, if money is what they lack.

      It’s only when a politician already has tons of money, which makes me scratch my head a little bit.

      1. Money, power, and sex are the three great motivators.

        Past a certain point, money is little more than power. Which is probably a big part of the reason so many rich people work, rather than just retire when they get the contents of their trust fund while still in their youth. It makes them feel important.

        As for pillow talk with Nancy Pelosi? Ack! With that picture in my head, I think I’ll be skipping lunch today.

        But you are right, it’s not only corrupt, it’s brazenly corrupt.

        The Stop Trading on Congressional Knowledge (STOCK) Act was passed almost unanimously by the Senate and the House in 2012. Then a year later, on a Friday afternoon, a bill went through in 30 seconds, with no dissent or debate, that made it extremely difficult to find or see the records that would reveal if someone was violating the STOCK Act.

    2. Profited maybe by additional exposure and being on Netflix but the film was a documentary and Netflix paid something like $10M for the distribution rights. Contrary to widely spread rumors, the $$ did not go to AOC.

  18. I’m surprised they don’t have more strict rules on what they can trade and when. Well, actually I’m not surprised- they make the rules lol.

    He must be onto something to invest that much in just four names. I certainly couldn’t stomach that much risk even if I had half of that much.

    Anyway you make a lot of good points on gray areas when it comes to insider trading. Thanks for the article!

    1. It is mind boggling that there are not stringent rules in place to prevent insider trading by elected officials. Within the finance industry, anytime I suspected that I had received information not available to the public, I had to call our insider trading team to determine what barriers need to be put in place to prevent the use of it for financial gain. Seems like something FINRA and the SEC should consider, though Congress governs Congress, so that may not get far!

      1. First thing that popped in my head. Just a $10 Billion contract, right? My wife was about to buy Amazon last week and she didn’t pull the trigger and has been regretting it this week. I told her there is no way she was suppose to know this news priorhand that made the stock jump. But what if congress did, and acted on it?

        1. I invested heavily in Amazon a few years ago. It’s only tripled or quadrupled since then, but I don’t know if I ever dare sell it.

          There is a wealth of science-fiction where, if you are not a shareholder of one (or several) of the world’s most powerful companies, you will be a second-class citizen, at best, with no one watching out for your interests (like Congress was/is supposed to do). In some dystopian futures I can see the Fortune 500 someday becoming the the Fortune 50, or even the Fortune 5.

          Sadly, I really wanted to buy Amazon in 1999, when I first discovered it as a customer but, alas, a family matter prevented it.

          Never have been tempted by bitcoin or Facebook, though. Missing out on both doesn’t cause me to grieve.

  19. It’s shocking how members of Congress and their immediate family members get to invest in single stock names where have sway over a company’s future.

    You would think that having all that money was good enough. But to then risk ruining your legacy and reputation over more profits just doesn’t make sense.


  20. well, since most of us have integrity and are not politicians, we won’t get rich like them.

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