The financial world experienced a historic first this month. Prosecutors just revealed that the first case of cryptocurrency insider trading recently made it to court.
Of course, no one actually believes this is the first time someone traded crypto on inside information. It’s just the first time anyone got caught.
A 26-year-old former employee of Coinbase, one of the world’s top crypto exchanges, recently admitted to using confidential company data to influence his trades.
By learning what new coins would soon be supported on the platform, this enterprising white-collar criminal was able to rack up U.S. senator-level gains in less than a year.
All in all, he made out with just over $1.5 million — about as much as the Pelosis make in a good month.
It’s infuriating to watch someone use secret knowledge to get a leg up on the competition. It undermines the entire concept of the stock market.
But I have to admit — I wish I had access to that information. I don’t know if I’d be able to resist the same temptation our young crypto insider succumbed to.
Sure, it’s unethical, but that hasn't stopped our senators, so why should it stop me?
Who’s Watching the Watchdogs?
I used dear old Nancy Pelosi as an easy target earlier, but she’s not even remotely alone. The level of bipartisan support for shameless cheating is impressive.
Each and every one of those smug faces reported trades in companies that their committees directly influenced. The rich continue to get richer while a 26-year-old crypto trader is facing possible jail time for the same crime these so-called “leaders” commit on a monthly basis.
It hardly inspires confidence in the system. But as individual investors, normal folk without a direct line to every important political decision in the country just have to bend over and take it.
After all, politicians aren't expressly prohibited from buying stocks. The companies they own also aren't restricted from making suspiciously well-timed moves that just so happen to coincide with their own policies.
What a load of BS.
The only way to render this absurd practice obsolete would be to pass a sweeping law banning all politicians from profiting on their insider knowledge.
But remember who votes for those laws in the first place. Who in the world would vote to take money away from themselves?
At the government level, insider trading is shielded by an impenetrable wall of political greed. It would take nothing short of a miracle to convince an entire room of the ultra-wealthy to unanimously vote away their cash cows.
Until then, one particular old cliche comes to mind…
If You Can’t Beat Them, Join Them
Here’s the tricky part: You can’t just piggyback off Nancy’s trades.
Politicians are required to report all trading activity, but the list isn't made public until more than a month later — far too late for even the most diligent copycat.
Getting on the same wavelength as the country’s decision-makers is an incredibly demanding process. It takes more legwork than nearly any other investing strategy, but the payoff is sweet.
It’s the closest thing to a guarantee that will ever exist in the stock market.
After all, the top 10% own almost everything. A full 89% of stocks are sitting comfortably in the hands of the uber-wealthy.
A good chunk of those at the top are active in politics. It’s shocking information, I know, but it means their private transactions are like neon signs pointing investors in the right direction.
The only problem? That neon sign is one of too many to count.
Top traders intentionally obscure their moves from the public, making our job that much more difficult. I’ll be the first to admit that I’m not an expert in this particular corner of the economy.
If I’m being even more honest, I follow everything my colleague Alex Boulden says on this topic to the letter. He’s spent so much time rubbing digital elbows with the top 10% that he practically smells like their cologne.
If you need some investment advice from people who literally wrote the book, his research is the way to go. Read through at your own pace here or let the expert himself explain the finer points in this short video.
