Senators’ Stock Trades Would Make a Poker Cheat Blush
Efforts to clamp down on potential insider trading by members of Congress have largely worked, but recent events suggest more needs to be done.
The results of Senators’ stock trades were as rare a a Royal Flush.
Photographer: Yoshikazu Tsuno/AFP via Getty Images.
One dispiriting story of the Covid-19 pandemic is that four U.S. senators sold hundreds of thousands of dollars of stock in the days after getting a classified briefing on the expanding coronavirus in January. The trades paid off as the virus spread and stocks crashed. This development is more interesting in a positive way than suggested by the news coverage, in that it shows efforts to clamp down on potential insider trading by members of Congress have largely worked. Even so, more needs to be done.
I’m a poker player. Cheating in poker is harder than most people think. It’s relatively easy to deal yourself or a partner good cards. You don’t need much practice for that, but it has minimal value. You can accomplish the same thing by merely throwing away your bad hands and only playing the good ones. To make money against good players, you need to deal other people very good cards, and yourself better cards, in statistically unusual ways. Since good players are relying on statistics, by subverting the odds, you can make money. But this becomes obvious pretty quickly. No one hand proves anything, but the build up of unusual events needed to make significant profits stands out clearly.