"If you can't beat 'em, join 'em..."
This tired phrase is very simple in theory, yet applies to so many complicated things - investing included.
We've all seen it play out before in our own lives: somebody less capable somehow manages to outdo us. It's maddening and could make you wonder why you even bother trying at all. "What are they doing that I'm not!" you may scream into your pillow on especially bad nights.
If you've done everything in your power to get ahead - only to watch somebody else lap you - it's time to try something else.
Many successful people had figured this out long ago: basketball players joining a super team, companies buying up young competitors, or - worst case - prisoners joining a hated gang to avoid being beaten up every day.
Speaking of people who need to be locked up and beaten, let's talk about Congress!
All they do - when they aren't campaigning - is meet up in backrooms rife with inside information that has broad implications for every facet of the economy. They are meeting with bankers, insurance companies, and defense contractors regularly to carve out a piece of the American pie for themselves.
That means they have a big leg up when it comes to investing.
While the STOCK Act technically makes insider trading by members of Congress and other government employees illegal, that certainly hasn't stopped them from making an absolute fortune on companies that they are intimately familiar with.
And there's nothing you can do about it.
So I say, if you can't beat 'em, join 'em...
Today I'd like to focus on the millions of dollars that congressmen and women have personally invested in defense stocks. I'll also show you how you can do the same thing - but without the pesky legal issues of insider trading or the cost of a D.C. office.
Here's a clear example...
On January 3, President Trump ordered a missile strike to assassinate revered Iranian General Qassem Soleimani. It worked: Soleimani was killed and panic set in. Thousands took to the streets in Tehran, we evacuated our consulates in Baghdad, and the rest of the diplomatic world took a very deep breath.
The next day, while the rest of us were wondering if World War III just started, many of those in Congress checked their stock portfolios and were rather pleased.
Lockheed Martin (NYSE: LMT) rose over 4% the next day while Raytheon (NYSE: RTN) was up 4.6%. The SPDR S&P Aerospace & Defense ETF (NYSE: XAR) is up almost 6% this year.
Considering that members of Congress own somewhere close to $6 million in these very defense stocks, it's not a stretch to say that the missile strike made them a pretty penny that very morning.
Just check out this chart from Sludge, who just did a great piece on this very issue:
Now, I'm not cynical enough to suggest that the people who haunt the hallowed chambers of Congress are praying for war. Nor are they purposely trying to incite wars to make a few thousand bucks. But the fact is that these "civil servants" are privy to plenty of information that we are not when it comes to geopolitics and defense contracts.
These defense bumps happen all the time.