Going to the mattresses

Happy Friday!

This week I tackled yet another useless stock market debate – growth vs. value investing. I have no idea why people treat this like Democrats vs. Republicans but they do. As in, one side is right and the other is philosophically insane.

My conclusion is that both styles have their place. It’s like active vs passive. One isn’t better than the other without first knowing what an investor is trying to achieve. 

Ok on to more interesting headlines…

There’s a proposed ETF from Tuttle Capital Management that will allow investors to bet against Ark Invest’s flagship Disruptive Innovation ETF (ticker: ARKK). Cathie Wood is the PM for ARKK, and she became famous for taking massive bets on risky stocks that went up a lot (she earned the nickname “Money Tree” in South Korea for a reason). 

I’ve seen ETFs that short markets, indices, and even stupid stuff like volatility. But I ain’t never seen an ETF target a single manager. Even in the cutthroat business of vying for investor assets, this is harsh. 

So, like pretty much everyone else who read about this, I want to know the back story here. What did she do to Matt Tuttle (CEO of Tuttle Asset Management)? Did she squeeze one of his shorts? Turn him down at the prom? Run over his dog?

He claims that it’s just business, but zero chance that’s true. There’s a conspiracy theory here. I just know it, but there’s nothing online. I even used Tor to search the dark web (away from Google’s control) and came up with nothing.

Speaking of conspiracy theories, I was waiting for my car to get repaired earlier in the week, and I walked by a Mattress Firm on the way to grab coffee. I stopped, looked inside, yet again saw nobody shopping, and smiled.

If you want to kill a few hours over the weekend, google: “mattress firm conspiracy theory” and crack a good bottle of wine/bourbon. You’ll thank me (for those who want the quick and dirty, here you go).

Moving on…

There are only two groups allowed to legally manipulate stock prices and/or trade on inside information. The first is Elon Musk, and the second is Congress.

Members of Congress have a long history of insider trading. They did it last year during the pandemic (allegedly), Nancy Pelosi’s husband recently sold out of Big Tech stocks right before Congress began investigations, and three congressmen were accused of breaking reporting procedures

Can’t imagine how any of this changes anytime soon, but I came across two websites this week that might help the Average Joe keep up with what Congress knows. 

The STOCK Act, passed in 2012 under the Obama administration, requires Congressmen (and their relatives) to file disclosures when buying or selling a stock. This law presumably gave life to Capitol Trades and Quiver Quant. Both cover and track trades disclosed by Congress (and relatives).

I find these sites to be interesting. It’s well known that quantitative funds look at retail trading as a contra indicator. Meaning, retail investors are almost always (1) late to a trade, and (2) wrong. So, when retail trading ramps up somewhere in the market, taking the other side of the trade can make a lot of money (with obvious exception to meme stocks during a pandemic).

Well, I wonder if quant funds can use sites like these to add factors to their model based on flows from Congress. Think about it. Adding a “Congress factor” to a model could incorporate cool things like classified information. That has to be valuable.

Let me be clear. I’m 100% sure funds are already doing this. There’s nothing novel or groundbreaking in what I just wrote. I just never considered it until stumbling upon these two sites earlier this week.

Enjoy the weekend…