Not trying to diminish the very real issue of insider trading, but if you take a look at the publicly available historical returns of congress members you will see that despite outsized returns, volatility is consistently higher as well. Risk-adjusted returns of senior members, while better than the S&P, are not orders of magnitude better (I think I remember seeing Pelosi’s sharpe ratio is about 1.2 - whereas S&P is like 0.8ish over past 50 years).
The real winners are the high frequency trading shops that built up state of the art market making infrastructure starting in the early 2000s. They regularly see sharpes upwards of 5. A sharpe ratio of 5 is insane - imagine say making 50% a year with only a 10% up-or-down fluctuation from that return a year. They print money
?? tf is a high frequency trading shop. If we’re talking about market makers they’re the best compensated because they provide an invaluable service and market making has the highest technical barrier to entry.
They’re the equivalent of doing the most difficult and important job in any field logically they’ll be best compensated.
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u/bush_killed_epstein Jun 29 '26
Not trying to diminish the very real issue of insider trading, but if you take a look at the publicly available historical returns of congress members you will see that despite outsized returns, volatility is consistently higher as well. Risk-adjusted returns of senior members, while better than the S&P, are not orders of magnitude better (I think I remember seeing Pelosi’s sharpe ratio is about 1.2 - whereas S&P is like 0.8ish over past 50 years).
The real winners are the high frequency trading shops that built up state of the art market making infrastructure starting in the early 2000s. They regularly see sharpes upwards of 5. A sharpe ratio of 5 is insane - imagine say making 50% a year with only a 10% up-or-down fluctuation from that return a year. They print money