Considering how prominent Nancy Pelosi is in discussions about Congressional trading – and possible Congressional insider trading – it might appear logical that copying her investments is a sound strategy.
The situation is not quite as simple since some politicians’ stock market successes depend on their timing, and laws governing disclosure requirements can make matching that aspect troublesome.
The timing can be especially sensitive in cases that particularly resemble insider trading. These may include large stock purchases just ahead of the announcement of a major government contract or sales preceding regulatory crackdowns.
Given Pelosi’s reputation, it may come as a surprise that, at least in 2024, she has mostly been prompt with stock market trade disclosures – and not as utterly successful as is usually assumed.
Exhibit 1: Nancy Pelosi’s sale of Visa stock
For example, the representative sold 2,000 Visa (NYSE: V) shares on July 1 and reported her activity on July 2.
Looking at the case of Visa stock, the difference between the trade and the disclosure would have benefited any hopeful copy trader. On July 1, the shares stood at $263.34 and at $268.23 one day later.
Still, the sale’s long-term soundness could be questioned as V shares stand at $290.68 at press time on September 17.
Such stock market actions demonstrate that blindly following Nancy Pelosi’s trades is not guaranteed to be lucrative even when the timing can be matched almost perfectly.
Additionally, the actual profitability of a Visa sale copied from the representative’s actions would greatly depend on the time of initial purchase. With the Former Speaker buying V stock before 2014, there is not a single point in 2024 when she would not have been significantly in the green.
A copy trader, on the other hand, who purchased the stock in March and sold in July would have lost money on the trade as they would have bought at approximately $289 and sold near $268.
Exhibit 2: Nancy Pelosi sells Tesla stock at a big loss
A similar case can be made for copying Nancy Pelosi’s June sale of Tesla (NASDAQ: TSLA) stock.
Additionally, the trade of the EV maker’s stock is another situation in which the difference between the sale and the reporting date would have been to the copy trader’s advantage.
On June 24 – the day the Representative sold TSLA stock – it stood at about $182, and on July 2, the day of the disclosure, it was above $231. Still, considering that Tesla’s share price at press time is $232.70, copy trading Pelosi’s sale would not have been a lucrative decision either way.
Additionally, the Former Speaker’s entire Tesla investment has not been the best decision as she purchased her stake in late 2021 and early 2022 – a time when the stock was trading near and above $300.
Exhibit 3: Nancy Pelosi loses on PANW stock purchase, but a copy trader would win
Looking at one of the Representative’s most high-profile 2024 stock purchases, however, tells a somewhat different story.
On February 23, 2024, Nancy Pelosi disclosed two acquisitions of Palo Alto Networks (NASDAQ: PANW) shares. On the day, PANW was trading at about $282 while today, at press time, it is at $346.80.
A copy trader that received the buy signal from a Congressional trading tracker such as Finbold’s Radar would have been 20.85% in the green on the Palo Alto purchase by September 17.
Like the previous two, the trade is interesting because the disclosure grace period would have favored the copy trader.
Representative Pelosi actually made her initial purchase of PANW shares on February 12, just days before the stock experienced a 1-day plunge from about $366 to about $261.
Exhibit 4: Nancy Pelosi’s famous Nvidia stock investment
Finally, copying the Former Speaker’s most famous investment – Nvidia (NASDAQ: NVDA) – reveals why she not only accrued but has also kept her reputation as one of the best traders in Congress.
The Representative has been doing something akin to dollar-cost-averaging with the semiconductor stock – if investments worth between $1 and $5 million can be described as such – and has been making regular purchases since at least June 2021.
Copying her initial NVDA stock buy – disclosed on July 2, 2021 – would have returned as much as 485%. Her later purchases, such as the one disclosed on December 21, 2023, would have grown an impressive 143.75%.
The most recent buys, however, are yet to turn a profit as Nvidia has, much like most of the U.S. stock market, been struggling through a series of shocks in August and September and, at press time, boasts a price significantly lower than its yearly highs: $117.94.
Can copying Nancy Pelosi’s investments turn a profit?
Ultimately, as amply proven by wider strategies and calculations accounting for all of Nancy Pelosi’s recorded stock market activities, copy trading her trades tends to perform well and does usually provide better returns than investing in a broad index fund.
Still, as the individual, high profile, and recent trades prove, the Former Speaker is not infallible, and the actual profitability of tracking her trades will depend on the circumstances of individual investors and on some luck.
Selling Visa at the same time as Pelosi would have turned a profit if the purchase was also synchronous with hers while following her in her purchase of Nvidia would have been lucrative under almost any circumstances.
Ultimately, copy-trading politicians like Nancy Pelosi is similar to investing in general: buying or selling on faith alone is no different than gambling.
Buy stocks now with eToro – trusted and advanced investment platform
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
Source: https://finbold.com/should-you-follow-nancy-pelosis-stock-moves/