Congress Made 6,170 ‘Insider’ Trades in 16 Months. You’d Go to Jail for One.

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The host of the Retire SMART Podcast put it plainly. “They are trading on things that they’re regulating.” The context was an analysis of congressional stock disclosures showing that 56% of trades involved companies in industries members were about to vote on, with 6,170 of 11,016 total purchases over a 16-month window falling into that overlap. If you or I bought a stock two weeks with advance knowledge of news that moves its price, we would be trading with material nonpublic information. In Congress, you file a PDF within 45 days and go to lunch.

The same podcast called Representative Ro Khanna of San Jose “the most active trader in Congress,” citing over 4,900 trades last year, and said his net worth reportedly grew from $800,000 when he ran for office to over $30 million. These are claims made on air, not court findings. The tracking platform GovGreed aggregates the underlying disclosures. Khanna has publicly supported banning member trading. Take the specific numbers as podcast claims and the broader pattern as the point.

The verdict, and the math that actually matters

The advice underneath the outrage is usually some version of “follow the congressional trades and you can win too.” That approach is expensive. If the playing field is tilted, the answer is to stop playing a game where the tilt matters, not to sprint uphill in dress shoes.

Consider two retirees, both 65, both with $750,000 saved. Retiree A rotates in and out of names based on filings and cable news, turns her portfolio over twice a year, pays short-term capital gains at ordinary income rates, and her all-in cost drag runs roughly 2% annually between taxes, spreads, and mistakes. Retiree B sets a 4% withdrawal rate, holds a boring three-fund portfolio, and pays maybe 0.1% in fund fees. Assume both underlying portfolios earn 7% before costs.

Retiree B nets around 6.9%. Retiree A nets 5%. On a $750,000 balance drawing $30,000 a year, that gap is roughly $14,000 in year-one performance she never sees. Compounded over a 25-year retirement, the trader ends with a fraction of the boring investor’s balance. The insider edge does not close that gap. Transaction costs and taxes are the only guaranteed numbers in the equation.

The financial mechanic here is opportunity cost measured after taxes and fees. Every trade is a bet that your information is better than the price. When the counterparty is sometimes a sitting member of the House Financial Services Committee, that is not a bet you want to size up. It is a bet you want to opt out of.

The one variable that flips the decision

The variable is your income floor. It is whether your fixed monthly needs, housing, food, insurance, Medicare premiums, are covered by guaranteed sources before you touch a brokerage account.

Social Security is the anchor. Under the current benefit formula, the program replaces 90% of the first $926 in average indexed monthly earnings, 32% between $926 and $5,583, and 15% up to the roughly $14,050 monthly maximum. Every year you delay claiming past 62 up to 70 adds roughly 6.7% back per year to the reduction applied before full retirement age, and delayed retirement credits stack on top past 67. That inflation-adjusted lifetime paycheck is worth more than any stock tip.

If your Social Security plus any pension covers essentials, then your portfolio is playing with house money and volatility is tolerable. If it does not, you have a sequence-of-returns problem, and a portfolio churned on speculation is exactly the wrong shape. Same person, same account, opposite prescription. The variable decides.

What to actually do this week

1. Pull your Social Security statement at SSA.gov and run the claiming calculator for ages 62, 67, and 70. Write down the three monthly numbers. That is your income floor menu.
2. List your fixed monthly expenses including Medicare Part B, supplemental coverage, property taxes, and insurance. Subtract Social Security and any pension. The remainder is what your portfolio actually has to produce.
3. Calculate your portfolio turnover for last year. If it is over 30%, price out the tax drag in your bracket. That is the annual cost of trying to keep up with people who file on a 45-day delay.
4. Separate legacy money from income money. Money you will not spend in your lifetime can hold equities through drawdowns. Money you need in the next five years should not.
5. Write down your healthcare inflation assumption. If you are using 3%, double-check against your last three years of premium notices. Underestimating this is what actually blows up retirement plans, not missing a hot trade.

Build an income plan that does not care what Congress bought last Tuesday.

The post Congress Made 6,170 ‘Insider’ Trades in 16 Months. You’d Go to Jail for One. appeared first on 24/7 Wall St..