👩🏻⚖️📱📈 Amateur traders on TikTok have a new strategy, says Tim Mak in NPR: watching where members of Congress invest their money, then copying them. “I’ve come to the conclusion that Nancy Pelosi is a psychic,” says one TikToker, calling the 81-year-old Democrat the “queen of investing.” A law called the Stock Act requires politicians to disclose their stock trades (and those of their spouses) within 45 days.
So far this year, Senate and House members have filed more than 4,000 such disclosures, buying and selling stocks and bonds worth at least $315m. Financial services consultant Matthew Zwijacz is setting up a financial instrument that automatically tracks congressional stock picks, because, he says, lawmakers are “probably privy to more information than just the general public”. Research suggests these congressional trade declarations are self-fulfilling prophecies: they prompt buyers and sellers to follow suit, driving prices up and down. “Investors perceive that senators may have insider information,” says Dinesh Hasija, an assistant professor at Augusta University in Georgia. The strategy works, he adds: “We see abnormal positive returns when there’s a disclosure.”
The wages of sin
🎰🍾💊 In an investing world seemingly obsessed with doing good, one exchange-traded fund issuer is looking to profit from the “not-so-good”, says Elaine Chen in Bloomberg. Listed Funds Trust is creating the BAD ETF, a financial product that will track an index of betting, alcohol and drugs firms. It will buy shares in companies that make most of their cash from casinos, booze, cannabis or pharmaceutical products. Many funds screen out such “sin stocks” because many investors consider them unethical. But that doesn’t stop those ventures generating “significant cash” – and BAD is more than happy to capitalise on this.
Profits aren’t forever
🕵🏻 🔫 📉 Bond films make less money than ever for their backers. The first 007 film, Dr No, cost $1m to make in 1962, but went on to earn more than $50m at the box office, a return on investment (ROI) of 54.2x. Things have never been so good since. Spectre was shot on a rumoured budget of $300m and earned $880m – a healthy wodge, but an ROI of just 2.9x.
One quirk in the data: each time a new actor takes over as Bond, the ROI jumps. By the time of Sean Connery’s final outing in Diamonds Are Forever, ROI had fallen to 16.1x, but that jumped to 23.1x for Roger Moore’s debut in Live and Let Die. Pierce Brosnan’s final Bond, the widely reviled Die Another Day, had an ROI of 3x, which was nearly doubled by Daniel Craig’s first outing, Casino Royale, on 5.6x.