When in doubt, pick the same stocks that lawmakers' spouses are buying? That's what retail investors are doing when it comes to trades made by House Speaker Nancy Pelosi's husband, Paul Pelosi, a businessman who owns a real estate and venture capital firm.
Though Nancy Pelosi herself doesn't trade stocks, her husband does. And that's enough for some social traders, who see his trades as hers. "We've been tracking their performance and every single stock she has bought in the last two years has gone up significantly," Christopher Josephs, cofounder of Iris, told Yahoo Finance Live. Iris is a social investing app allowing users to see the same stocks friends, influencers and professionals are buying.
Trades made by lawmakers or their family members are required to be disclosed within 45 days of execution.
"The reason why Speaker Pelosi became so popular was because every trade she was making inevitably turned out to be such a long-term winner," said Josephs.
"Albeit the entire market has gone up significantly, but these are very, very risky bets because she's been buying LEAP options as opposed to just stock," added Josephs.
Joseph notes each of the lawmaker's disclosed positions has been up 20-30% since their initial investment.
Speaker Pelosi's office sent Yahoo Finance the following statement:
"The Speaker does not own any stocks. As you can see from the required disclosures, with which the Speaker fully cooperates, these transactions are marked “SP” for Spouse. The Speaker has no prior knowledge or subsequent involvement in any transactions."
Retail investors are 'called dumb money, but we're becoming much, much smarter'
Scrutiny on lawmaker trades has increased since last year, when four Senators or their spouses sold large amounts of stock around the time they were receiving briefings about the severity of COVID-19. Shortly thereafter a pandemic was declared, and the stock market tanked.
"It's not out of the question to think that they [lawmakers] may necessarily know something that the retail investing community doesn't. And if they're the ones passing the laws, it's probably smart to keep up and see what they're buying," said Josephs. "It's something that we have made sure to keep an eye out."
He added, "The reality is, retail investing, we're called dumb money, but we're becoming much much smarter with how we go about investing."
Ines is a reporter covering the stock market for Yahoo Finance. Follow her on twitter @ines_ferre