The Weak Men & Women Creating Hard Times
Andrew Packer / February 24, 2025
“Hard times create strong men, strong men create good times, good times create weak men, and weak men create hard times.”
– G. Michael Hopff
February 24, 2025— In November of 2023, Nancy Pelosi, former Speaker of the House, and part-time investment savant, picked up some call options on Nvidia — because, you know, semiconductor policy briefings are a great source of inspiration for trades.
Then, in the true spirit of giving (or rather, strategic withholding), she waited until right before Christmas to let the public in on it.
By then, everyone was too busy bickering over who overcooked the ham to pay any attention.
If a corporate CEO pulled this stunt — sitting on material financial disclosures for weeks — there would be fines, hearings, and possibly a prison sentence.
But in Congress? It was just another Tuesday.
Fast forward to 2024, and Nvidia takes off like a SpaceX rocket — 171% gains. Call option buyers made even more.
How much did Pelosi pocket? We’ll never really know. Congressional disclosure rules are about as transparent as a mud puddle. She wasn’t required to specify the details of the options, nor does she have to report when she sells them.
All we know is that her net worth has casually ballooned to around $200 million.
And it’s not just Pelosi. Congress, in general, has turned the arduous work of renaming post offices into a lucrative side hustle.
It turns out that when you have access to insider briefings on industries, tax codes, and federal spending, you can make better stock picks than your average retail investor. Who knew?
Enter our friend Andrew Zatlin, an honorary member of the Grey Swan Investment Fraternity and a guy with an uncanny ability to read labor market data before the government releases the official numbers.
Now, he’s applying his skills to an even more predictable market indicator: Congressional stock trades. Because, let’s face it, our elected officials have a sixth sense for picking winners — almost as if they have access to information the rest of us don’t.
We’ve touched on this before, but it’s worth repeating: Congress consistently outperforms the S&P 500. By just a few percentage points a year, sure—but when you’ve been in office since shoulder pads were in fashion, those gains add up.
Senator Mitch McConnell (R-KY) announced he won’t seek re-election next term. But after 40 years in the Senate, his net worth sits conveniently north of $90 million. So, the job is apparently done.
The math doesn’t add up on a government salary. But, then again, the stock market has been very, very kind to our public servants.
Andrew Zatlin is about to release his first research report tracking Congressional trading — and, more importantly, how the rest of us can profit from it.
Because let’s be honest: Until Congress passes a law barring itself from trading on inside information (don’t hold your breath), the only logical strategy is an old one: If you can’t beat ‘em, join ‘em.
We’re digging into this rapidly growing archive of Congressional trading shenanigans, starting with an archival piece from last July on some unusually well-timed trades by the Congresswoman representing Andrew Packer’s South Florida district. It’s a must-read.
Cheers to gaming the system—just like your lawmakers do. ~~ enjoy, Addison
Weak Men and Women Create Hard Times
Andrew Packer, Grey Swan Investment Fraternity
In 2001, Martha Stewart sold shares of Imclone before prices collapsed.
In so doing, she avoided $45,673 in losses.
That was chump change to Stewart, who was nearly a billionaire following the IPO of her media business. In fact, her magazine, Martha Stewart Living, was bringing in more than $60,000 per day.
However, the Imclone sale caught the eye of regulators eager to crack down on white collar crime. The SEC explicitly stated at the time they were using their budget money wisely and going after Stewart explicitly because she is high profile.
Bear in mind … this was in the aftermath of Enron’s collapse and a slew of other accounting scandals…
Amid the dotcom bust, where billions of dollars were raised to fund businesses that had no plan to ever turn a profit, they went after the lady who showed us how to beautify our homes on a budget.
It was also two years after regulators got the first warning that Bernie Madoff was operating a ponzi scheme, but six years before that unraveled. But, again, smaller fish to fry.
Stewart pled not guilty at trial. She showed that she had a standing order with her broker to sell shares if they dropped below $60.
But her broker had insider information, and called Stewart to encourage the sale before that information became public.
That was enough for a jury to convict. Stewart received five months in prison, and five months of probation, plus a hefty fine.
Fast forward to 2022. First Republic Bank collapsed shortly after the bank run that hit Silicon Valley Bank.
On March 16, 2022, my member of Congress here in South Florida (who shall remain nameless), sold shares of that bank before it slid 98%.
That same congresswoman then bought shares of JPMorgan Chase, the bank that took over First Republic’s assets for pennies on the dolla— and with some government-backed guarantees to boot.
In so doing, this member of Congress not only saved up to $15,000 in potential losses. She also benefited from JPMorgan’s monster rally over the past year.
Surely she’s facing the same consequences as Martha Stewart, right? After all, she was also trading on privileged, non-public information.
Surely there’s not a double standard for members of Congress, who are, after all, the same flawed human beings as you and I?
This may come as a shock. But this particular congresswoman’s corruption isn’t even meriting a primary challenge.
And that’s on top of having all of the perks of being a member of Congress. The salary, the staff, the travel expenses, and a phenomenal health care plan (the best your tax dollars can buy).
Meanwhile, as a constituent, I can’t even get the courtesy of a reply to mail sent in 2021. In the private sector, someone who couldn’t handle such a simple job task would have been let go a long time ago.
That’s not all.
Of the 535 members of Congress, she was in the top 10 for total returns during 2022, making out like a bandit while the rest of us had to sit through a bear market.
How were these returns made?
Nobody knows. While members of Congress are supposedly required to disclose trades in a timely manner, Congress has yet to create a law to properly enforce the requirement.
Of course, these returns pale in comparison to the tens of millions made by Nancy Pelosi, both during and after her Speakership. Even 60 Minutes has noted as far back as 2012 just how profitable some of her trades have been.
She’s managed to parlay a salary of about $250,000 per year into phenomenal wealth, just shy of $115 million.
And it’s why Twitter/X channels like Unusual Whales have launched to try and systematically track all this wheeling and dealing.
This corruption has likely always been a part of Congress.
But in the digital age, when financial records can be tracked and compiled in real time, we’re just now realizing how institutionalized and pedestrian it is for members to enrich themselves while performing their public “service.”
Meanwhile, when asked about these suspicious trades in banking stocks, all my member of Congress had to say was that the trades were made at the discretion of an independent advisor.
In other words, the Martha Stewart defense.
A Nation of Men and Women, Not Laws
In 1780, my rather distant relation, John Adams, wrote the constitution for the state of Massachusetts. It’s the oldest governing document still in use today.
Over the past few decades, Adams has regained respect as one of the Founding Fathers. His work on drafting the Declaration of Independence, serving as a diplomat in Europe, and serving as the first Vice President just scratches the surface.
Like most of his era, he was a farmer first, growing flax and other crops from sturdy New England soil.
Most of my ancestors followed a similar path. As have most of yours. It’s only been a few generations since industrialization changed the path of millions away from physical toil.
Those were hard times. They were made easy by generations of men and women aspiring to help those around them, not enrich themselves at the public expense.
Low government expenses and regulations made technological innovations easy.
We still had booms and busts, as we likely always will. But the goose of laissez-faire economics was still allowed to lay the golden eggs.
So when I say hard times are upon us, I get it. It’s hard to believe, much less take seriously.
We have lived easy in America.
But, much like Venezuela or even California, when you stifle the goose that lays the golden eggs, you eventually stop getting golden eggs.
Our weakness is apparent today. It can’t be hidden much longer. Congressional trading abuse is just one crack that’s become apparent in recent years.
Eventually, one of these cracks will bring our republic down.
A big part of our problem lies in politicians who have made a career out of politics … on both sides of the aisle.
Our founding fathers had minimum ages for entering public office, but didn’t expect anyone to make a career out of it.
George Washington, who could have been a king, stepped down from the presidency after two terms, going back to his farm.
John Adams passed away on July 4, 1826, at the age of 90 (50 years to the day after the signing of the Declaration of Independence, and the same day Thomas Jefferson passed away). His presidential term had ended 25 years before, in 1801, at the age of 65.
Part of today’s weakness is that we’re devolving from a nation of equally-applied laws to one where some men and women are, to paraphrase George Orwell, “more equal than others.”
Holding a political office was once a noble service. But now it’s been transformed into a scheme to hold onto power for the sake of wealth, not serving the public.
When members of Congress openly and notoriously engage in the same kind of illegal behavior that got Martha Stewart sent to prison, you may just be in the end stage of American society.
When I moved to Florida from my home state of California in 2009, I used to joke that I was a “refugee.” Today, seeing California leading the nation in cost of living and economic inequality, people get the joke. That joke has become all too real.
The rest of the country is following in California’s footsteps. And there are fewer and fewer places to still strive for the American dream of being left the hell alone to achieve in peace.
Florida is one of those places, South Florida’s Congressional representatives notwithstanding. Amazon founder Jeff Bezos just moved here, conveniently around the same time the state of Washington was looking to charge a surtax on capital gains. (His estimated savings? $600 million.)
There’s no telling how much harder times will get before we find the political will to stand up to corruption and runaway government power, if at all.
Pointing out the corruption and standing up against it? As Martha Stewart would say: It’s a good thing.
Regards,
Andrew Packer,
Grey Swan
P.S. from Addison: Since this was first published on July 3, 2024, Mr. Packer’s member of Congress was re-elected, winning 60% to the Republican challenger’s mere 40%. Donald Trump, whose Mar-a-Lago residence is in this very same district, narrowly lost Palm Beach County 49.01% to Kamala Harris’ 49.77%.
P.P.S. Musk’s weekend email to the federal bureaucratic “blob” sent media pundits into convulsions. If you missed it, here’s the gist: He told the drones to submit five bullet points every week explaining what they actually do.
Naturally, this was met with pearl-clutching and fainting spells. Heaven forbid anyone question what’s going on in those soulless cubicles.
But Musk’s real heresy recently?
Suggesting that all legislation be made available to the public — electronically — seven days before Congress votes on it. Sunlight, after all, is kryptonite to the political class.
And then there’s the third idea floating around the ether — auditing how members of Congress, earning a tidy $174,000 salary, somehow end up with hundreds of millions in net worth while in office.
Somehow, those last two ideas seem… connected. Coincidence? We’ll let you decide. In the meantime, we’ll be poking around in dark spaces Washington this week — flashlight in hand, looking for cockroaches.
Send your comments to addison@greyswanfraternity.com