Thoughts on Dub App Investing

[J.P. MoreGains]

Any thoughts on Dub App Investing?

https://www.dubapp.com/

I mean this seems like a decent idea that I think will get some traction. Why not just copy the portfolio of some politician/important person?

I'm definitely an indexer but this has my curiosity. I'm wondering how different fees are structured.

I'm still too new to have any strong opinions but I am curious.

I could see myself taking like 5% or something of each new paycheck and putting it into something like this if I learned more. Kind of like how I'm considering putting a small percent into bitcoin.

Any strong feelings on this?

[beee]

Why not just copy the portfolio of some politician/important person?

Why not just put the money in the top performing stock or etf?
Same reason.

[MustacheAndaHalf]

"Copy politicians, hedge funds, or top traders on dub."

I haven't researched it in many years, but I'd suggest looking for studies on politicians outperforming the market.  One limitation: Dub learns about investments by public filings, which can trail actual positions by months.  It may be too late to profit off their information, by the time it becomes public knowledge.

I don't believe Dub can copy hedge funds, without violating SEC laws and getting shut down.  They may offer access to some hedge funds to some investors - but not all hedge funds to all investors.  Which means you can't imitate Ray Dalio's investment in the hedge fund he used to run, Bridgewater Associates.
"You generally must be an accredited investor, which means having a minimum level of income or assets, to invest in hedge funds."
https://www.sec.gov/files/ib_hedgefunds.pdf

[dandarc]

I personally don't like to bet on promises from brand-spanking-new businesses of this nature. Dub just got its broker-dealer license in February. I know as a broker there are some safeguards in place, but still - why should we trust them or their copying algorithm to actually work as advertised with being so small and so young?

[Telecaster]

You have to skate to where the puck is going, not where it has been.   You need to know the trades before they made a lot of money, not after.

And before you invest in Bitcoin, ask yourself what is the driver behind Bitcoin's price?   

[J.P. MoreGains]

Okay this makes more sense now with the public filings being delayed and not actually being able to copy their portfolio instantly as they are doing things.

When I see "Whatever politician up whatever %" it's not like I actually get their portfolio in real time. So this takes away a lot of the benefit I would see in getting from something like this.

Not a lot of reason to change my strategy that is already working which has worked for a lot of other people.

With bitcoin I'm also curious I don't know a lot. Listened to a podcast on Bogleheads on Investing which talked about bitcoin and more mainstream adoption. I don't know enough now to really say one way or the other. But I am considering a small % of each paycheck in bitcoin.

[Scandium]

Why not just copy the portfolio of some politician/important person?

But why copy the portfolio of some politician/important person?

What's the point? Even disregarding the lag time, do you know they'll outperform the market? Someone had a list of the return for every member of congress, and they did below the index.

edit; the more i look at that page the dumber it looks! It's like f*@# instagram for stock picking! With "influencers" you can follow, i.e. put your actual money into their idiotic sock picks. I can't find a big enough face palm.

[GuitarStv]

But why copy the portfolio of some politician/important person?

Some politicians trade with insider information - in theory at least, they should be able to better the market because of this.

[Scandium]

But why copy the portfolio of some politician/important person?

Some politicians trade with insider information - in theory at least, they should be able to better the market because of this.

I mean yeah I've heard this conspiracy. And it "feels correct", but haven't actually seen much evidence of it, or any stat showing that congress-people outperform the market long term (someone showed a chart with ~1/4 of congress outperformed the market over 1-2 years or something, but that's hardly convincing.

And I'm no expert, what exactly is the insider information they would have? Laws are debated publicly for months/years. Anyone can watch that on CSPAN. Agency decisions (EPA, FDA) affect a lot of industries, but are made by agencies, and AFAIK not usually shared with congress beforehand? Foreign policy and security I guess? But that would be hard to trade off of.

[Michael in ABQ]

But why copy the portfolio of some politician/important person?

Some politicians trade with insider information - in theory at least, they should be able to better the market because of this.

I mean yeah I've heard this conspiracy. And it "feels correct", but haven't actually seen much evidence of it, or any stat showing that congress-people outperform the market long term (someone showed a chart with ~1/4 of congress outperformed the market over 1-2 years or something, but that's hardly convincing.

And I'm no expert, what exactly is the insider information they would have? Laws are debated publicly for months/years. Anyone can watch that on CSPAN. Agency decisions (EPA, FDA) affect a lot of industries, but are made by agencies, and AFAIK not usually shared with congress beforehand? Foreign policy and security I guess? But that would be hard to trade off of.

Your average member of congress probably wouldn't have access to that much inside information. But more senior members certainly would get access to classified briefings and other non-public information. And they would also be more likely to have the capital to make large enough bets in the market to be meaningful. Here's one recent example.

https://www.propublica.org/article/senator-dumped-up-to-1-7-million-of-stock-after-reassuring-public-about-coronavirus-preparedness
https://www.propublica.org/article/burrs-brother-in-law-called-stock-broker-one-minute-after-getting-off-phone-with-senator

His biggest sales included companies that are among the most vulnerable to an economic slowdown. He dumped up to $150,000 worth of shares of Wyndham Hotels and Resorts, a chain based in the United States that has lost two-thirds of its value. And he sold up to $100,000 of shares of Extended Stay America, an economy hospitality chain. Shares of that company are now worth less than half of what they did at the time Burr sold.

A lot of members of congress have become very wealthy on a low 6-figure salary (currently about $175k/year). Especially considering that most have to maintain a separate residence in Washington D.C.

[Scandium]

But why copy the portfolio of some politician/important person?

Some politicians trade with insider information - in theory at least, they should be able to better the market because of this.

I mean yeah I've heard this conspiracy. And it "feels correct", but haven't actually seen much evidence of it, or any stat showing that congress-people outperform the market long term (someone showed a chart with ~1/4 of congress outperformed the market over 1-2 years or something, but that's hardly convincing.

And I'm no expert, what exactly is the insider information they would have? Laws are debated publicly for months/years. Anyone can watch that on CSPAN. Agency decisions (EPA, FDA) affect a lot of industries, but are made by agencies, and AFAIK not usually shared with congress beforehand? Foreign policy and security I guess? But that would be hard to trade off of.

Your average member of congress probably wouldn't have access to that much inside information. But more senior members certainly would get access to classified briefings and other non-public information. And they would also be more likely to have the capital to make large enough bets in the market to be meaningful. Here's one recent example.

https://www.propublica.org/article/senator-dumped-up-to-1-7-million-of-stock-after-reassuring-public-about-coronavirus-preparedness
https://www.propublica.org/article/burrs-brother-in-law-called-stock-broker-one-minute-after-getting-off-phone-with-senator

His biggest sales included companies that are among the most vulnerable to an economic slowdown. He dumped up to $150,000 worth of shares of Wyndham Hotels and Resorts, a chain based in the United States that has lost two-thirds of its value. And he sold up to $100,000 of shares of Extended Stay America, an economy hospitality chain. Shares of that company are now worth less than half of what they did at the time Burr sold.

A lot of members of congress have become very wealthy on a low 6-figure salary (currently about $175k/year). Especially considering that most have to maintain a separate residence in Washington D.C.

OK. And they are being investigated by the SEC for insider trading. So, what does that prove? They do it, and get caught? Doesn't exactly show that it's rampant. I don't want to defend senators! Buy I do care about facts.

And obviously senators etc do a lot of other "side gigs" to make money, speaking, boards etc. "They have money" Doesn't necessarily mean it's all insider trading.

[Michael in ABQ]

But why copy the portfolio of some politician/important person?

Some politicians trade with insider information - in theory at least, they should be able to better the market because of this.

I mean yeah I've heard this conspiracy. And it "feels correct", but haven't actually seen much evidence of it, or any stat showing that congress-people outperform the market long term (someone showed a chart with ~1/4 of congress outperformed the market over 1-2 years or something, but that's hardly convincing.

And I'm no expert, what exactly is the insider information they would have? Laws are debated publicly for months/years. Anyone can watch that on CSPAN. Agency decisions (EPA, FDA) affect a lot of industries, but are made by agencies, and AFAIK not usually shared with congress beforehand? Foreign policy and security I guess? But that would be hard to trade off of.

Your average member of congress probably wouldn't have access to that much inside information. But more senior members certainly would get access to classified briefings and other non-public information. And they would also be more likely to have the capital to make large enough bets in the market to be meaningful. Here's one recent example.

https://www.propublica.org/article/senator-dumped-up-to-1-7-million-of-stock-after-reassuring-public-about-coronavirus-preparedness
https://www.propublica.org/article/burrs-brother-in-law-called-stock-broker-one-minute-after-getting-off-phone-with-senator

His biggest sales included companies that are among the most vulnerable to an economic slowdown. He dumped up to $150,000 worth of shares of Wyndham Hotels and Resorts, a chain based in the United States that has lost two-thirds of its value. And he sold up to $100,000 of shares of Extended Stay America, an economy hospitality chain. Shares of that company are now worth less than half of what they did at the time Burr sold.

A lot of members of congress have become very wealthy on a low 6-figure salary (currently about $175k/year). Especially considering that most have to maintain a separate residence in Washington D.C.

OK. And they are being investigated by the SEC for insider trading. So, what does that prove? They do it, and get caught? Doesn't exactly show that it's rampant. I don't want to defend senators! Buy I do care about facts.

And obviously senators etc do a lot of other "side gigs" to make money, speaking, boards etc. "They have money" Doesn't necessarily mean it's all insider trading.

This is just one example where it was so blatant that they got caught. And then nothing happened which only emboldens everyone else to think they're above the law - because they write the laws. I'm not going to spend hours researching every potential/proven case of insider trading with members of Congress. Suffice to say it does happen - and trying to trade off their positions would be useless as it gets reported publicly well after the trades occur.

[ChpBstrd]

But why copy the portfolio of some politician/important person?

Some politicians trade with insider information - in theory at least, they should be able to better the market because of this.

This app sounds like peak Generation X cynicism paired with the social media age idea of "influencers" who can tell us how to get rich without reading old fashioned books. The makers of the app will get rich, guaranteed, because they are tapping into the same zeitgeist that brought us cryptocurrencies, Trump, WallStreetBets, and TikTok.

VTI is just sitting there ready to make us rich and yet people won't buy it. That's because their social media bubble has convinced them the stock market is rigged, but this newest shitcoin, meme stock, or options strategy isn't.

[beee]

VTI is just sitting there ready to make us rich and yet people won't buy it.

Too slow for a lot of people, they want to get rich quick, not "save 50%+ of your income and invest for decades".

[vand]

I'd advise you to watch this video in its entirerity to understand why copying anyone - even the most successful traders/investors - blindly, will not work for YOU.

Market Wizard's Jack Schwager

https://www.youtube.com/watch?v=I5W5j8R5jG0

[Michael in ABQ]

VTI is just sitting there ready to make us rich and yet people won't buy it.

Too slow for a lot of people, they want to get rich quick, not "save 50%+ of your income and invest for decades".

Literally just saw this on Twitter where someone was showing how their portfolio that was primarily VTI was up 23% while the actively managed portfolio from a financial advisor was only up 11%.

I advised them to continue investing in broad market index funds (VTI, etc.)

"It's so boring, I want that gambling feeling. lol."

[Scandium]

This is just one example where it was so blatant that they got caught. And then nothing happened which only emboldens everyone else to think they're above the law - because they write the laws. I'm not going to spend hours researching every potential/proven case of insider trading with members of Congress. Suffice to say it does happen - and trying to trade off their positions would be useless as it gets reported publicly well after the trades occur.

I was inspired to take another look at this. There are endless articles on how "congress members outperformed in 2023". Which of course some did. Though on average Republicans actually underperformed the S&P500, and so did many Dems as well. As you would expect with a normal distribution!

While I can't read the full article this is a more proper analysis over many years. Maybe it's junk, I don't know, but it's at least published in a proper journal instead of fb clickbait.
https://www.sciencedirect.com/science/article/abs/pii/S0047272722000044
Relevant quite, bold mine

We find no evidence of superior investment performance whether we look in aggregate or at Senators specifically accused of informed trading. Over a six-month horizon, stocks bought by House Members underperform on average by 26 basis points, while stocks sold underperform by 11 basis points. Even at the 95th and 99th percentiles of ex-post stock returns, House and Senator stock returns are consistent with random stock picking.

[J.P. MoreGains]

Yeah, overall I have to agree that the old fashioned way of live well below what you earn and invest the rest in indexed funds is really the best way. The "get rich quick" way of doing things doesn't work for vast majority of people.

Agree that the younger generation out there has all kinds of different ideas of what to do. Some of the stuff I've heard on podcasts is crazy.

It's kind of like the best way to make money picking stocks isn't to pick stocks but instead to have an online course on how to pick stocks.

[Metalcat]

Wait.. what??

Is this a commonly held belief that politicians are more savvy investors than average? Enough so that we should mimic their investing patterns??

Is that actually a claim being marketed??

Is this an American thing? I've been around Canadian politicians my entire life and not once have I looked at them for personal finance inspiration.

Is this really a thing???

[dandarc]

I mean, yeah, there's a not insignificant set of people in America that think that. They're wrong as posters upthread pointed out, but that doesn't stop people from thinking it. Tends to be folks angry with the system (and probably not investing much at all if we're honest) or people looking for some easy way to beat the market as is the case with this thread.

[MustacheAndaHalf]

Years ago I read about the idea of investing in companies who lobby Congress, since those companies outperformed other stocks.  Perhaps by tilting the playing field, or perhaps by having enough money to lobby Congress.  But there was a very narrow range of discussion where that remained an investing discussion, so I've avoided mentioning it since.

I'm not aware of a thorough study of members of Congress and investments.  I'm aware in 2020, members of Congress dumped their stock holdings after being briefed on the Covid pandemic in February 2020.  Technically, people could have figured out Covid would hit the U.S. and be bad (like I did), but having a panel of experts brief members of Congress is a decided advantage not available to most investors.  But I'm not aware of a systemic study, only of isolated incidents (which others mentioned earlier).

[Michael in ABQ]

Wait.. what??

Is this a commonly held belief that politicians are more savvy investors than average? Enough so that we should mimic their investing patterns??

Is that actually a claim being marketed??

Is this an American thing? I've been around Canadian politicians my entire life and not once have I looked at them for personal finance inspiration.

Is this really a thing???

I think it's most applicable in the US vs. Canada due to the number of publicly traded companies that a particular piece of legislation or insider knowledge could affect.

There are some members of Congress that have the wealth and information access to take advantage of insider knowledge. I.e. if you are the committee chair and know that a certain clause buried deep in a new bill is going to help or hurt a specific company or industry you could use that knowledge in the stock market. The average member of Congress won't have that much power to influence a vote or get non-public information that is of meaningful value as most classified congressional briefings are only for a relative handful of senior members, not every Senator or representative.

[Scandium]

Years ago I read about the idea of investing in companies who lobby Congress, since those companies outperformed other stocks.  Perhaps by tilting the playing field, or perhaps by having enough money to lobby Congress.  But there was a very narrow range of discussion where that remained an investing discussion, so I've avoided mentioning it since.

I'm not aware of a thorough study of members of Congress and investments. I'm aware in 2020, members of Congress dumped their stock holdings after being briefed on the Covid pandemic in February 2020.  Technically, people could have figured out Covid would hit the U.S. and be bad (like I did), but having a panel of experts brief members of Congress is a decided advantage not available to most investors.  But I'm not aware of a systemic study, only of isolated incidents (which others mentioned earlier).

You're in luck, because I posted one above!
"Do senators and house members beat the stock market? Evidence from the STOCK Act"
published in Journal of Public Economics in 2022.
(spoiler alert: no)

This looked at congress member trades from 2012 - 2020, so an actually slightly more meaningfully long period, rather than the 2 months before the pandemic (which as you point as was public information anyway!)

This paper also analyze congress member traders (2004-2022, but doesn't evaluate their performance, just note that they "trade more during crisis/uncertainty". To me they sound like your regular, think-they-are-smarter (underperforming) daytrader bro.
https://www.sciencedirect.com/science/article/abs/pii/S1059056024005835

[J.P. MoreGains]

just note that they "trade more during crisis/uncertainty". To me they sound like your regular, think-they-are-smarter (underperforming) daytrader bro.

I think my whole issue is that I don't deeply understand investing. I've read a bit on indexing and feel like I can take the general advice from here and bogleheads and do well. But I still don't really understand enough.

For this reason part thinks that there has to be some way to beat the market. Last time I was in Mexico City I was in line at a museum and heard some guy from LA talking about how he is a day trader. So in my mind I think "wouldn't that be nice". How great would it be to just make enough money to live off of trading.

I think I just need to read more and understand majority of traders underperform the market.

And also realize... I'm doing awesome and it's only a small number of people in the world that had a better year than I did last year by just saving 75% of income and putting the rest in index funds.

So I shouldn't be envious of day traders and everyone out there that has a fancy, complex strategy to trade and invest.

[Metalcat]

Years ago I read about the idea of investing in companies who lobby Congress, since those companies outperformed other stocks.  Perhaps by tilting the playing field, or perhaps by having enough money to lobby Congress.  But there was a very narrow range of discussion where that remained an investing discussion, so I've avoided mentioning it since.

I'm not aware of a thorough study of members of Congress and investments. I'm aware in 2020, members of Congress dumped their stock holdings after being briefed on the Covid pandemic in February 2020.  Technically, people could have figured out Covid would hit the U.S. and be bad (like I did), but having a panel of experts brief members of Congress is a decided advantage not available to most investors.  But I'm not aware of a systemic study, only of isolated incidents (which others mentioned earlier).

You're in luck, because I posted one above!
"Do senators and house members beat the stock market? Evidence from the STOCK Act"
published in Journal of Public Economics in 2022.
(spoiler alert: no)

This looked at congress member trades from 2012 - 2020, so an actually slightly more meaningfully long period, rather than the 2 months before the pandemic (which as you point as was public information anyway!)

This paper also analyze congress member traders (2004-2022, but doesn't evaluate their performance, just note that they "trade more during crisis/uncertainty". To me they sound like your regular, think-they-are-smarter (underperforming) daytrader bro.
https://www.sciencedirect.com/science/article/abs/pii/S1059056024005835

Yeah, I truly can't imagine politicians magically having superior investing strategies on average.

I mean, sure, they have some insight and influence on *some* industries, but not beyond what industry insiders already have. Politicians are largely reactive creatures, so experts researching industries usually already have a pretty solid grasp of what to expect from them, which means a lot of what they do gets baked into share prices before they even do it.

Knowing more than the average person doesn't help much in trying to beat the market, you have to know more than the people who make entire careers of understanding industries and making bets on what they predict will happen, and that very much includes what politicians are likely to do.

It's also surprisingly difficult to know enough to have an advantage without commiting a crime, but even if politicians are ubiquitously committing insider trading crimes, it's still pretty useless to know what they are invested in if you didn't know *before* they bought it.