Congress' Stock Secrets

Members of Congress in the US are legally allowed to buy and sell stocks, and they have to make their investments public. While this may seem like a good thing, it has raised questions about potential conflicts of interest and insider trading. More than 220 members of Congress held individual stocks in 2020, with Apple, Microsoft, Disney, Alphabet, and Amazon being the most popular.

Tech stocks

Seventy-nine lawmakers reported holding shares of Apple, the world's first trillion-dollar company. Apple enjoys investments from members of both parties, but Democrats are the biggest investors in the iPhone maker. House Speaker Nancy Pelosi, who represents a district neighbouring tech giants in San Francisco, reported owning up to $25.5 million in Apple stocks.

Microsoft is the second most invested company, with 65 lawmakers owning stocks in the tech giant. Microsoft was also the stock most traded by members of Congress in 2023, with 141 trades.

Alphabet, the parent company of Google, is another popular tech stock among members of Congress. Alphabet was the fourth most traded stock by members of Congress in 2023, with 64 members of Congress owning Alphabet stock.

Amazon is also a popular tech stock among members of Congress, with 37 members invested in the company as of 2020.

Other popular tech stocks among members of Congress include Nvidia, PayPal, and Intel.

Healthcare stocks

However, it's important to note that drug stocks can carry regulatory risk. There has been increasing public and political scrutiny of drug companies, and there are concerns about the rising costs of US healthcare. As a result, some investors choose to avoid prescription pharmaceuticals and focus on other areas within the healthcare sector.

Some popular healthcare stocks among members of Congress include:

• Microsoft
• Alphabet
• Nvidia
• UnitedHealth Group
• Johnson & Johnson
• Pfizer
• Abbott Laboratories
• Thermo-Fisher Scientific
• Merck & Co. Inc.
• Eli Lilly & Co.

Defence stocks

Lockheed Martin is a popular investment for Congress members, with at least 18 members of Congress owning stock in the company. Lockheed Martin is the world's largest defence company and the US government's biggest contractor. It is also the lead contractor on the F-35 Joint Strike Fighter, the world's most expensive airplane. Other popular defence stocks for Congress members include Raytheon, Boeing, Northrop Grumman, and General Dynamics.

The potential for conflict of interest is clear, as members of Congress are responsible for setting the Pentagon's budget, half of which goes to military contractors every year. Despite this, members of Congress are not prohibited from sitting on congressional committees, writing legislation, or voting on bills that may affect them financially.

In response to concerns about potential conflicts of interest, some members of Congress have introduced legislation to ban stock trading in specific sectors or by Congress members altogether. However, self-regulation is a challenging task, and it remains to be seen whether any of these bills will be successful.

Financial services stocks

Some of the largest financial services stocks by market capitalization include Berkshire Hathaway, JPMorgan Chase & Co., Mastercard Inc., Bank of America, Industrial and Commercial Bank of China, and Wells Fargo & Co. These companies offer a range of services, from investment banking and commercial banking to credit card processing and insurance.

However, there are also risks associated with financial services stocks. They are cyclical and sensitive to economic downturns, as people and businesses may reduce their spending and investment during tough times. Defaults on loans can also strain balance sheets and lead to bankruptcy. Technology disruptions from fintech companies and increased government regulation can further impact profits.

When investing in financial services stocks, it is essential to research the sector and understand the ins and outs of the industry. Diversification is crucial, and investors may consider exchange-traded funds (ETFs) and index funds to benefit from industry gains while mitigating the risks of individual stocks.

Energy stocks

A 2023 analysis by the Washington Post revealed that 73 members of Congress (13.6%) had sponsored or co-sponsored legislation that could benefit businesses or industries in which they or their family members were invested. Energy and natural resources were among the top sectors for these investments.

According to the analysis, the top 10 largest investors in the energy sector included Sen. John Kerry (D-Mass.), with investments worth $16.2 million, and Rep. Michael McCaul (R-Texas), with investments ranging from $8.2 million to $19.1 million in oil, gas, and coal interests.

Other notable investors in the energy sector include Rep. Trent Franks (R-Ariz.) with $15.8 million, Rep. Mike Kelly (R-Pa.) with $15.2 million, and Rep. Darrell Issa (R-Calif.) with $15 million.

It is worth noting that members of Congress are not prohibited from trading stocks in companies that could be affected by the legislation they are considering. However, insider trading laws do apply to them, although the information they gain from their work may not meet the definition of insider information.

The public, however, has expressed concern about the potential for conflicts of interest, with an overwhelming majority supporting a ban on members of Congress trading individual stocks.

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