Two Hundred Bucks and a Stock Tip
Hello dear show notes readers!
This week Dan and I sit with a question that has been bothering me for a while and got sharper this week thanks to a perfect natural experiment: a US Army NCO got charged for making four hundred thousand dollars on Polymarket betting on the Maduro raid he was part of. Around the same time, Senator Markwayne Mullin bought stock in Chevron — the only US-listed company with Venezuelan oil operations — days before the same operation. The senator's position is up about twenty-two points over the S&P. The soldier is going to prison. The senator is going to a committee hearing.
We get into why that gap exists, what the data on congressional trading actually shows (it's more nuanced than the headlines), why the STOCK Act has a two-hundred-dollar fine and zero prosecutions in roughly a decade, and whether the answer is more rules or more sunlight. Spoiler: I came in believing one thing and Dan talked me partway out of it.
We also fall down a few side roads we couldn't resist — the French guy who spoofed a Polymarket weather contract by holding a hairdryer to the airport temperature sensor (still my favorite grift of 2026), the term-limits and lifetime-appointments question, and a riff about reading David Deutsch and Rory Sutherland in the same week. Dan plants a seed at the end about something we've both been wrestling with: what happens to investing when you bolt a probabilistic machine (LLMs) onto a deterministic one (the legacy quant playbook). That one's coming in a future episode.
Thanks for sticking with us. We are, by Dan's accurate diagnosis, "the weird ones because this is what we choose to do with our weekend." Go build something.
— Sean
🔴 Sean (~17:18): "Back before 2004 when they passed the Stock Act, I think it was 2004…"
The STOCK Act was passed in April 2012, not 2004. The 2004 date is the Ziobrowski et al. study, which analyzed 1993–1998 Senate trading data and found ~85 basis points/month abnormal returns. Different document, ten years apart, both important — Sean conflated them. (The directional point — that congressional alpha looked larger before the legislation forced disclosure — is correct.)
🟢 Sean (~09:43): "I'm sure that there's a system where if you're an NCO, you can only go to..."
Correct. US Army NCOs run E-4 (Corporal) through E-9 (Sergeant Major of the Army). Above that are warrant officers (W-1 to W-5) and commissioned officers (O-1 to O-10). NCOs do max out at E-9 — Sean was right (and Sean explicitly asked us to fact-check this on-mic).
🟢 Sean (~12:08–12:23): "NANC, plus about 30%... S&P plus 25%... Republicans... trailing the market by a good 8 percentage points."
Approximately correct. Trailing-12-month: NANC ~28.78–31.54%; KRUZ ~18.14%; SPY ~25%. Sean was within a point on each.
🟡 Sean (~17:55): "Top decile of Congress trades at about plus 30%, which is impressive that that's over every era."
Directionally correct but slightly oversold. The Ziobrowski (1993–1998) and Belmont et al. (2022) papers find that the top decile of Congress members significantly outperforms the market, but +30% as a constant across all eras is a rough approximation. The actual top-decile alpha varies by year and era; +30% is roughly right for the most-active high-frequency traders in recent years.
🟢 Sean (~20:07): "$200 fine... zero prosecutions on these 200-plus incidents since [2012]."
Correct on both counts. STOCK Act late-filing fine is $200 (with a member-applied waiver path); per multiple Sludge / Business Insider audits, dozens of late-filing violations have been documented and zero criminal prosecutions have occurred.
🟡 Sean (~19:42): "since 2014, [late reports have] been going up every year from single digits. Now we're seeing about 50 trades a year that aren't reported on time."
The trend direction (rising late-filings) is correct. The specific year-over-year shape is approximate — different audits use different definitions of "late." 50/year is in the right neighborhood.
🟢 Sean (~12:14): "Mark Wayne Mullen right there with his Mark Wayne Mullen trade wasn't in great size — only $50,000 when I saw reported."
Correct. Mullin's Chevron disclosure was $15,001–$50,000 (Capitol Trades / Senate disclosure), purchased Dec 29, 2025; the position is up ~24% with SPY up ~3% over the same window.
Final score: 1🔴 / 2🟡 / 4🟢.
One-line summary: Strong on the data, sloppy on the date — the STOCK Act is a 2012 law, not a 2004 one, but the directional argument holds.
