The U.S. Congress has repeatedly demonstrated that its trades, often suspected of being based on insider information, tend to outperform the performance of the S&P 500, even in times of weaker stock market performance.
During the recent stock market downturn, the Sector Weighted DC Insider Strategy trading bot successfully managed to outperform the market. The bot focuses on purchasing stocks from companies that invest heavily in lobbying, receive significant government contracts, and, most importantly, are favored by U.S. politicians in their stock trades.
In the previous month, the stock market at one point erased $2.9 trillion in a single day, sparking fears of recession; however, the trading bot recorded a positive 5% gain.
Sector Weighted DC Insider Strategy trading bot performance since inception. Source: Quiver Quantitative
Which stocks make up the trading bot’s holdings
This trading bot’s holdings list focuses primarily on the amount spent on lobbying and the size of government contracts, with several notable companies making up the list.
The largest position, at 9.05%, goes to International Business Machines (NYSE: IBM), worth over $23,271,705, and has provided a 50% return since being added to the trading bot portfolio.
Technology giant Microsoft (NASDAQ: MSFT) is the second-largest holding, with an 8.56% position worth $22,009,938, and has offered an impressive return of 166.26% since its start.
Accenture (NYSE: ACN), a company that specializes in information technology services and consulting, is in the third-largest position, with 8.47% of the shares and a value of $21,786,269. It has returned 3.88% since its addition.
Abbott Laboratories (NYSE: ABT), a multinational medical devices and healthcare company, is in the fourth most prominent position at 5.05%, worth $12,987,801 and a return of 4.75%.
Other notable companies belong to various sectors, such as automotive, healthcare, and defense, with heavy lobbying and sizable government contracts as common traits.
How successful is the trading bot?
Looking at the overall performance of the Sector Weighted DC Insider Strategy trading bot since its creation on April 1, 2020, it has offered an annual return of 20.82%, well above the S&P 500’s average annual return of 10.26%.
Furthermore, the Compound Annual Growth Rate (CAGR), which measures investment growth over a year assuming that profits are reinvested, stands at 24.31%.
Trading bot performance since inception. Source: Quiver Quantitative
Most notably, the strategy that combines information on suspected insider trading, lobbying expenditures, and government contracts has a win rate of 85.58%, meaning that of the 689 trades it conducted, approximately 563 were successful.
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