Yesterday, I showed you how about a third of Congress members outperformed the stock market in 2023…
How elected officials traded stocks in sectors tied to their work…
And how some even sold or bought stocks before major price moves.
I’ve been tracking Congress members’ investments at Inside Wall Street since we launched this letter in 2021.
The idea is that if you know where America’s most powerful are putting their money, you can position yourself to reap some of the profits.
So, I asked my analysts to crunch the numbers on Congress members’ 2023 investments.
Yesterday, we looked at the Top 10 members of Congress who outperformed the S&P 500 last year.
And today, we’ll dive into the sectors and companies that the House and Senate favored in 2023.
Where Congress Members Put Their Money
Our story today unfolds in three charts.
The first chart shows the Top 10 stocks that House members bought in 2023.
They spent $16.2 million on these stocks. Almost $7 million, or 42%, went to tech stocks. You can see that in the chart below…
Apple, Microsoft, and Alphabet (Google’s parent company) made the Top 5. Representatives spent a total of $5.5 million on these three companies.
Democrats made up 87% of the tech purchases. Their top pick was Apple, with $2.3 million in investments.
House Republicans focused on a mix of sectors and targeted companies like ConocoPhillips, Tyson Foods, NGL Energy, and Bayer. They spent $9.1 million on their Top 10 stocks.
Over at the Senate, it’s a similar story. The next chart below shows Senate members’ Top 10 stocks of 2023…
You can see above that the Top 10 stocks were in the technology sector, followed by consumer defensive.
The Top 5 companies were Admiral Acquisition, PayPal, Cleveland-Cliffs, Qualcomm, and Clorox.
Overall, Senate members spent $6.7 million on their 10 preferred stocks. A big chunk of that, about $2.3 million or 35%, went into tech stocks like PayPal, Qualcomm, and Texas Instruments.
Congress’s 2023 Bet on Tech Paid Off
Congress members’ bet on tech paid off in 2023.
Artificial intelligence (AI) boomed. The tech-heavy Nasdaq Index surged by 43%.
Nvidia became the first trillion-dollar chipmaker, wrapping up 2023 with a 241% gain. And Apple ended the year above a $3 trillion market cap.
These two companies – along with Alphabet, Microsoft, and Amazon.com – were the most traded stocks among Congress members in 2023.
That’s what our last chart below shows…
Yesterday, I showed you how former House Speaker Nancy Pelosi made a 65% return in 2023. And how her investments in tech were a major factor.
And Pelosi wasn’t alone. On average, Democrats – known for their affinity for big tech – made a 31% return.
Republicans, who tend to avoid tech, “only” made 18%.
What This Means for Your Money Today
In short, Congress members poured their cash into tech last year.
That aligns with one of the five distortion profit themes I’ve put on your radar – Transformative Technology.
It’s one of the sectors I’ve targeted to help you get ahead in what I call The Great Distortion. Regular readers of Inside Wall Street will know what I’m talking about…
The Great Distortion is the disconnect between the markets and the real economy.
It’s a wedge central banks created when they pushed cheaper money into the banking system – as much as $9 trillion since the financial crisis of 2008.
And with rate cuts coming, The Great Distortion remains alive.
The good news is that markets like cheap money whenever and however it comes. And certain sectors benefit more than others when the Federal Reserve cuts rates.
The tech sector is one of them. That’s because growth sectors like tech often depend more on borrowing. So, they tend to rise with lower borrowing costs.
We’ve seen this play out before…
When the Fed cut rates in 2008, tech surged 44% in the months that followed. The overall market fell by 8.4%.
The same happened when the Fed cut rates in 2020. Tech went up 62% in the months that followed. The overall market went up “only” 15%.
I expect we’ll see something similar this time around. If history is any guide, when the Fed shifts to cutting rates, tech companies will rally.
One way you can position yourself to take advantage is with the Invesco QQQ ETF (QQQ). It tracks the high-tech Nasdaq 100 Index. And it’s already up 6% this year.
But I don’t recommend going “all-in” on QQQ. I suggest a measured approach. So, for instance, if you have $1,000 to invest in QQQ, invest $250 each quarter.
This is what we call “dollar-cost averaging.”
That way, if there are price swings along the way, you’ll still participate in the upside associated with rate cuts over the year.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins