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Wired
I know a fellow who used to run a decent amount of equity money. His
specialty was retail stocks. He had a good track record. He took maximum
advantage of the quarterly income reporting cycle of a few medium
sized, well know big box retailers. He played that game from both the
short and the long side. If you catch that right you can make some good
money.
This group hired a number of part-timers around the country. These
people would sit outside a specific store with a hand counter and
measure traffic. Traffic does not equal sales. But if you have hard
numbers on traffic your estimate on sales will be better than most.
So they had an edge. They earned it and benefited from it.
Could you define the information they obtained as “material”? Sure you could.
Could you define this information as "non-public"? Sure you could.
Should we be in the process of unfolding the onion of what has been
defined as insider trading there is going to be a very big surprise. I
think that all successful hedge funds and big investors have “counters”
that are gathering/reviewing data. They all have (or try to have) an
edge. What do you think they are paid 2&20 for?
I have said this forever. If you’re a small investor relying on public
information you don’t have a chance. The S&P is ‘unched’ for a
decade. Wired money made a few hundred percent.
»
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bruce,
i *so* didn't expect this sort of response to your post. hell, i thought it made common sense (which is not so common). just the responses alone were worth the price of entry. tnx.
while we can debate where the line between 'material information' begins and ends, how about we question the premise of this entire casino from a few thousand feet up and reconsider the conversation a bit? consider:
if i accurately assess the risk of any 'game' (soccer, stocks, bookie odds, poker, marriage, etc.), the results of my participation will usually yield results consistent with the risk. i may lose at vegas craps, but still have a good time. fair deal, even *with* the statistically audit-able house edge. and i may play again. state lotteries... same thing.
if, however, a pigeon-dude planted with the three-card-monte guy on the corner, who "indicates" that you can usually win that game helps mis-guide my assessment, then something is sketchy. only through experience (or the losses of others) can i make a better assessment of *that* game and choose not to play (or play). add to that, the fact that there is *no* regulation of the street game, and i know/perceive that as part of the risk.
this market is 'bent', but there are huge forces trying to indicate and re-assure us that it isn't 'bent'. even though it is being 'bent' upward to the benefit of many players/pensions, etc. the fact that it is able to be 'bent' at all is far more important to me than the direction. many ignore this at their long-term peril. e.g. housing only goes up.
maybe i've been reading ZH for too long, but i see this entire market infrastructure as a vast street game (not even having the vegas veneer), with the mere existence of the SEC/FDIC/... being the plant/pigeon trying to suck us into their game with the illusion of integrity and insurance.
and as a culture, we're constantly trying to institutionalize integrity with these various laws and SEC-like institutions... and we're repeatedly seeing the failed results... *if* we choose to *look*.
the mere existence of the SEC implies to the average participant that buying a share of IBM from the NYSE is a fair operation with rules and insured integrity. so (collective we) play. but anyone watching knows better, and 'expert-networks' are only one of a thousand clues that there is little integrity at all.
yet viable markets still (can) exist. real transparency: at any open auction where the *real* product is traded (cattle, wheat, gold, etc.), i can scrutinize the seller, weigh the bushel, and generally assess the value of the product before i compete for it (to speculate or feed myself). the seller also knows that i may be back next week and want bushels again. *that* is a market where everyone is aligned, and we don't need any SEC-like coverage. if he puts rocks in the middle of his bushels, i can still sue for breach-of-contract, and better, i can spread the word, and refuse to buy from him in the future. simple accountability. current markets haven't scaled these mechanisms well-enough to trust.
effectively, the SEC does not regulate. effectively the FDIC cannot insure enough.
i would have more faith in my general market perception and involvement if the SEC/FDIC just went away, and i would know where the risk *really* lies: on me and my own due-diligence. these persistent market forces that make it easier to invest (fleece us) do *not* reduce the risk, they merely make it easier to ignore the risk that exists. this is key!
e.g. the wide shoulders and measured double-yellow lines on the center of our roads do *not* change the reality that most of sit comfortably 5 feet away from a 120 mile per/hour brick wall (60mph x 2cars, etc.) for hours at a time. think about that...
understand that i don't believe that there shouldn't be regulation/insurance, but because private market entities would *see* the need for, and offer the level of "insured fairness" that we crave/demand, we would then patronize them - even if it meant standing under a tree and calling out bids again.
failing this, many aren't playing at all ("buy physical", etc.) - and the PTB know that. the SEC is a useless place-holder for a real need that they (SEC) will never be properly motivated to fill. i think the SEC/gubmint is figuring out that most of the hands-on investors are onto their useless game and have left it. while they (PTB) are using the resulting low-volume to nudge that market back up for now, they have to be *really* worried about what to do when that market starts to top and there's *not* going to be any momentum to pick up the slack. then what? and as it goes ever-higher, i am even *less* motivated to buy in high. not the right feedback loop going right now.
you either trust a service or you replace it. e.g. if the police don't protect the populace well enough, the populace gets guns... then the police are even more nervous and neutered... and in response, the populace ... buys more guns.
Certainly, investment houses with the resources to directly gather (public) information will do better than a small investor (like myself) who relies on published information that always comes out late. I accept that and don't have a problem with it.
However, the idea that my broker is trading against me based on information that was "purchased" from government officials or company officers that is supposed to be confidential makes me want to end the so called "free markets" completely.
If I am only a "sheep" to be fleeced by the insiders, why would I not use my vote to elect people that would confiscate the wealth of the "fleecers?" Yes, the markets have always been rigged against the small investors but by maintaining that this was illegal and occasionally punishing insider trading, the market was able to maintain the political support of the little guy.
If the big traders come out and say "it is a rigged game, get used to it," people like myself will say "F@%k you, lets end the markets and go to a system that at least pretends to be fair, even if we are all worse off!" Bruce, you need to read the research on preceived fairness and how that affects decision making. Humans will insist on apparent "fairness" even if it negatively affects their personal circumstances.
The "insiders" better be worried about the perceptions of the outsiders. If the markets are perceived as rigged by the average American, the markets will be destroyed. That may be "cutting off our nose to spite our face," but it will happen. Count on it.
Restoring an appearance of a partially "level playing field" is essential to the survival of the markets, and capitalism in general. America is getting angry, because they scared (for once our blind Fearless Leader found an acorn) and because it is becoming obvious, in articles like this, that our elites not only steal from us, but despise us so much they won't even pretend that we have a chance to participate. At some point, the frustration will boil over in violence and system change. The new system may not be better for the little guy but it will, at least appear to be more fair.
Preying on the average person is what elites do. Preying on us while laughing at us will get you killed as our elites are going to find out shortly.
Insider trading laws can be compared to speed limits. In the individual case and a particular situation, a given speed may not be unsafe but it is still illegal because in most situations it IS dangerous. In the case of material, nonpublic information, we have provided a line of demarcation between getting it from outside and getting it from inside. Perhaps in many cases the inside information would be innocuous and would not give an investor an undue advantage, but as you get closer to the executive suite there are cases that carry the potential to harm both the company in question and the investing public at large. So we make the whole of it illegal, and we find and prosecute the worst cases.
We say to the individual investor: if you trade the fact that your pharma neighbor tells you a key drug is going to make it through phase 3, you can go to jail. If you spot a new Cayenne in his driveway and trade that, you're ok.
If your expert network includes someone from Pratt & Whitney who says of a Rolls-Royce engine program "I don't know how they're going to solve problem X--we couldn't lick it" that is very different from having someone in the same position at Rolls-Royce who says "Y'know, problem X is really coming back to bite us hard this quarter."
At the end of the day it's about trust, and the keeping of it or the abusing of it. Put a different way, we travel the highways unconcerned not because we believe there are no robbers, but because we believe those robbers to be few and far between, and kept in check by the authorities. If we believed robbers to be rife, let alone that there was an organized thuggee cult, we wouldn't travel. Regulators must convince us not that there are no crooks on Wall Street, but that in general we can assume that our returns will be commensurate with the quality of the companies we choose to invest in, and that those results will closely track the economy as a whole and the performance of their people and assets. Without those assurances the market will lack broad participation, and that is not good for the availabilty of capital (unless of course, you have a sugar daddy Fed, but I digress).
Massive outflows from equities and huge percentages of the trading activitity being handled by HFT algos tends to show that public sentiment is on the wrong side of the ledger at the moment. The SEC must send a signal that the ship will be righted or the small investor will not be back anytime soon.
Its got people talking so good on ya Bruce, mate.
Its a simple article for simple folk of which i was. You get buy and hold rammed down your throat when ur a simpleton and where does it get you with the stock market.
Butt-raped.
http://www.dailymail.co.uk/news/article-1332746/Asian-gang-raped-girls-y...
how thankful I am to read a little Bruce, turn of the phrase and his pics got juice, and it ain't just like the photo attached, pretty boy with depth and a brain to match. :))) yo
If I believed that fundamentals consistently drove stock price then I might think that there was a shred of relevance to this article.
However, probably the most obvious thing we see from recent history is that there is almost no correlation between a company's fundamentals and the stock price. IMO a stock with a 130 PE and paying no dividend and no expectation to ever pay a dividend is a casino bet and not an investment.
This does not mean that insider information is not relevant. However, the most important insider information is not about upcoming financial results, but instead about whuch people and companies with money intend to buy and sell, and in what quantities ... because this and this only ultimately drives price. And this is where information about companies such as Goldman, who are frequently reported to front run their clients and where they are placing their pre-informed "smart money" is valuable.
... and that is how companies such as Goldman make money. They trade on their buying and selling power. They are bigger than the market.
"there is almost no correlation between a company's fundamentals and the stock price."
The correlation is between the stock price and the company fundamentals, distorted by government intervention - such as the endless creation of fiat currency. Note that Zimbabwe had the best-performing stock market in the whole world when it underwent hyperinflation.
"Goldman, who are frequently reported to front run their clients"
Dealing with someone who front runs you puts you at a competitive disadvantage. I probably wouldn't deal with someone with such a reputation. But, I guess in customers' views, the other benefits of Goldman outweigh this disadvantage; otherwise the customers wouldn't voluntarily do business with Goldman. It seems that a relationship with Goldman is valued by its customers. Clearly, Goldman is well-loved and isn't hurting any one.
"They are bigger than the market."
Doubtful. Even large governments, like the US government, are subjected to market prices. Even the endless issuance of bonds and fiduciary media and the collection of taxes cannot overcome this. It is only a totalitarian state that can overcome the dominance of the market - and only by dismantling the market through violence. The result is the abolition of personal property and voluntary exchange, industrial autarkies, impossibility of rational economic calculation, complete and utter impoverishment, and military helplessness: http://en.wikipedia.org/wiki/North_korea
Medium sized big box retailers........sounds like a lot of companies that do not even exist anymore....Caldor, Bradlees, Ames, McCrory......etc ad infinitum... i used to be an expert in dinasaurs....
"we show that market devices exist to help those firms that wish to prohibit to their insiders the use of inside information for their transactions. Moreover, we argue that insider trading becomes a problem in the relationship between shareholders and insiders when the government meddles with the market. Insider trading is a problem not because there are "market failures" but because the government intervention creates such failures."
http://mises.org/journals/scholar/AP.pdf
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Man did I take some heat on this one. Everyone hated it. What prompted me to write it was an article in the WSJ today titled:
Supply Data Now a Focus of Probe Has the "channel check" become a criminal act? I know nothing of channel checking. But in the end it is in the same space as my example of monitoring traffic. All this stuff falls into the "edge" I wrote of. I DON'T THINK CHANNEL CHECKING IS ILLEGAL IN ANYWAY. I DON'T THINK CHECKING TRAFFIC IS ILLEGAL EITHER. How so many of you read this and concluded that I was suggesting that this was improper is a mystery to me. Clearly a lousy writer. One suggested I take a rest, I'm thinking cyanide. So the vocal majority says that counting/checking is fine. You all want to be wired. You all want an edge. But here is the deal on that. If you all had an edge, there would be no edge. Only select small groups can have an edge. Sorry. I was mostly currencies. To the best of my knowlege there are no gentleman's rules in that space. Everyone is wired. I'm not invoved anymore. My guess is that insider information (as to whom is doing what to whom) is still very much in vogue. Sorry you did not like it. I wanted a discussion. Not a turkey shoot. Speaking of which, enjoy!Bruce,
I give you a hard time, but I give you the benefit of the doubt you're not a 100% bad guy. But really!!!! With all the crap that is going on BOTH at hedge funds and mutuals and you want to talk about this??? WSJ ignores Steve Cohen and his pals and what, wants to discuss if bubble gum littered on exchange floors gives some traders an advantage??? It's a moot topic that only the idiots and investment bank stenographers of WSJ care about!!!!!
>I DON'T THINK CHANNEL CHECKING IS ILLEGAL IN ANYWAY. I DON'T THINK CHECKING TRAFFIC IS ILLEGAL EITHER.
That came across pretty clearly in your article.
I'm not a lawyer, so I can't be sure whether any given peacfeful, consensual act is legal or illegal. All I can say is that channel checking, traffic checking, and insider trading are all morally legitimate and logically defensible components of a free market based on peaceful, voluntary exchanges.
.
Insider trading creates trusts which deprive the legal market participants opportunity and money. Greenspan also thought fraud shouldn't be prosecuted until he didn't.
Today, the enormous cooperation between government and Wall Street makes these "trusts" much more of a potential problem.
A rich secondary market could develop on inside information (which obviously already has). What does that mean?
CAPITAL ASSURES you a return.
The same risk-free business model of government-backstopped banking.
"Insider trading creates trusts"
If you don't like firms where insiders gain through insider trading, or where the behavior is openly permitted, then invest your money elsewhere. The market should be able to decide whether it wants to receive information through planned press releases, or whether it wants information distributed more rapidly through insider information and stock prices. There are plenty of mechanisms available in the market for self-enforcement, if that is what market participants truly want: http://mises.org/journals/scholar/AP.pdf
"which deprive the legal market participants opportunity and money"
It doesn't deprive connected market participants of opportunity. It sounds like you are complaining simply because you aren't connected enough. If the stock price rises suddenly, is that not giving you more timely and accurate information about the stock than having to wait for a press release?
Can I complain if my slow internet connection can't download a press release as fast as someone else? Does that make them a criminal? Also, since when is "depriving" someone of an "opportunity" a crime?
"A rich secondary market could develop on inside information (which obviously already has). What does that mean?"
Information is valuable. The development of new markets to distribute valuable things sounds like a good thing. Also, it's likely that this black market would be more efficient at distributing vital information and more open if it wasn't driven underground. If it wasn't a black market, profit opportunities would be substantially reduced. Also, if there weren't arbitrary laws and regulations creating an artificial scarcity of information, then insider trading profits would be substantially reduced.
"The same slimy business model of government-backstopped banking. "
I don't understand. I'm asking for the government to stay out of it and not prosecute insider trading. Market participants making peaceful, voluntary transactions and obeying contracts have plenty of tools to solve such problems - without having a bunch of thugs arbitrarily throw innocent people in the clink.
You might see public corporations as ships, run by agents. I see them as OWNED by owners.
When I'm an owner of a stock and we hire you, even as CEO, you cannot go about selling your privy to others for money or personal benefits, nor to have someone hit my ask 8% higher, a day before the big news hits. You helped a third party pop someone you have a duty to.
You're not only usurping opportunity and moonlighting, you're violating a fiduciary trust and causing loss to those who you have an established legal relationship.
I call your ethical position, "the pirate". Corporations are ships to be taken-over for management's largess and the legal relationship between them and the individual shareholders is unremarkable, hardly understood. Your view is actually more common than mine, which is why corporate law needs upending.
>I see them as OWNED by owners.
Yes, I agree that a corporation is absolutely 100% owned by its shareholders. Managers at the company are not really entrepeneurs since they are risking other people's capital. They might have entrepeneurial duties though, such as forecasting market conditions.
>you're violating a fiduciary trust and causing loss to those who you have an established legal relationship.
Most likely. If the manager agreed not to commit insider trading, and does anyway, then he is disreputable and should be discharged or face some kind of discipline from the board. I just don't think he should be incarcerated or threatened with guns for doing a poor job. Voluntarily exchanging one's property based on learned information isn't a crime in my view; I don't see why armed men are required at this point. He might "cause loss" but he is certainly not a thief. He didn't steal any one's stock certificates. He didn't victimize anyone. If you are really against insider trading then you could have used one of the available market mechanisms, such as a contract making him liable for civil penalties.
The man should not be locked up for insider trading any more than someone should be locked up for the heinous crime of felonious leek conveyance http://en.wikipedia.org/wiki/Onion_Futures_Act
There is another situation: if insider trading is openly permitted at the firm, then the manager is not disreputable. He is merely reaping the benefits of a perq afforded him. Again, he doesn't deserve to be locked in a cage. And of course, when insider trading is openly allowed, rather than occuring on black markets, the profit opportunity is substantially reduced. There is no justifiable reason why this alternative market solution isn't legally permitted. Market participants have plenty of tools to stop it if they don't like it, as you would understand if you read my earlier posts.
There are probably a million creative solutions in between the two examples I laid out, that involve peaceful and voluntary exchanges. Of course, in our hampered market, they probably won't ever have a chance to be discovered and tested.
This whole issue ultimately boils down to this core issue: whether a person can actually use their own property and knowledge in peaceful ways, or whether armed men will attack them for trying to do so.
So far no argument here against insider trading has attempted to touch this one core issue. All I hear are diversions based on personal and socialistic utilitarian calculations, jealousy and hatred of the rich, or the sheer ignorance and inertia of tradition.
Perhaps you should have the judgment to avoid perpetuating WSJ red herrings.
I bet some people come here to escape the fraudulent echo chamber and rhetorical devises of the MSM.
The channel checking article is a simple, not-to-be-missed, rhetorical slippery slope device with the intent to take your eye off the actual illegal conduct of the WSJ's prime benefactors!
Don't kill yourself. Learn from it!
P.S. WTF is this? "If you all had an edge, there would be no edge. Only select small groups can have an edge. Sorry." Really? You write that as if an EDGE can only be POSSESSED, not CREATED. That's your problem. Access, not labor or intellect creates the proper edge? Access makes "edge" a finite market. Intelligence is infinite. That's why we need more prosecutors and jails.
HOW DARE THEY KNOW MORE
http://blog.mises.org/6323/how-dare-they-know-more-than-others/
Counting shoppers is absolutely public information.
Anyone in the pubic is allowed to do it, legally.
Paying to be in a room with an insider where you can get a picture painted? Not-public.
Such a HUGE difference, I can't believe the simile was offered, as if this is all about innovative and labor intensive techniques.
LMAO! Not even CLOSE...
PEEL BACK THE ONION. Make them count shoppers and get innovative.
BUST THE MONEY "TRUSTS" that are clearly being established.
If we don't, the fat, stupid, lucky and connected will inherit the market. Idiocracy on the way.
Drop the pathetic similes aka justifications for developing a super-class of legal law-breakers, like the Indian caste system except American and fascist. Yeah, don't peel back that onion folks, you may find Mexicans being employed to count Dominoes drivers leaving the store.
So ridiculous it's mendacious.
This is why I tell people, you can't negotiate with an industry who's morals are so deeply decayed. You must assert force, law and build jails or you will lose your country short of its 250th birthday.
Given how confused people are, even liberty-advocates for the most part, the "country" is almost certainly long lost already.
That's how I made a fortune on RICK I sat out in the parking lot counting those that went in and then those who left smiling Yep I nailed those earnings and a few girls in the process.
"Inside information" is a question of degree, not fact.
Everyone inside a company is a potential leak source of inside information. The guys in product development, the guys who speak to the guys in product development, the board members, the outside accountants, lawyers, regulators and share registrars, etc. It's all a matter of degree.
The guy in product development whose wife doubles their net worth by buying 100 shares is ethically no different from the board member whose wife buys 100,000 shares to double their net worth. You are either ethical or you are not.
Socialist central planners making more rules will never solve the problem.
read the article. THIS SHIT has been going on for DECADES! ANYONE who doesn't believe the markets aren't rigged is an idiot, or is IN on it. jeeeeez, what's it take to wise the sheeple up. F.D.ASSES................
I have to agree, this was a weak post, from someone who should know better.
Of course professional money managers have full-time staff who do their own research and analysis. That's not an unfair advantage, that's a costly service. If you want the benefits, you have to pay for them. Are people who paint their own houses and probably screw it up at an unfair advantage to people who hire professionals to paint their houses?
This has absolutely nothing to do with insider trading, which is a corruption of public corporations, and not only unfair but also does serious damage to market allocation of resources.
"not only unfair"
I see. So people are criminals not because they aggressed against a victim and damaged their body or property. They're criminals because they're "unfair".
"but also does serious damage to market"
Please explain how voluntary exchanges damage the market, considering that the market comprises voluntary exchanges.
"allocation of resources."
Does the stock value end up at a different objective exchange value because of insider trading? I see no reason, ceteris paribus, why it would end up differently. If you think it does end up at a different price, which price is the "correct" market price - the price based on allowing voluntary, peaceful exchanges? Or the price based on people being threatened with lethal force?
If it's "excessive" exec compensation that bothers you, is it insider trading, stock options, or salary that should be eliminated? What's the "right" amount of compensation? What would the "pay czar" do?
How much lower would insider trading profit be if the artificial scarcity of information - caused by arbitrary laws and regulations - were removed?
Find out how you can fight back against the Wall Street Crooks that just robbed you and watch the video “BIG WAVE AHEAD” with the people you care about (http://youtu.be/zfRIZYbKUCI).
Anonymous-
Thank you for this inspirational video!! We need more people like you helping to spread the truth!
If memory serves me well, this is how ADP does it...
I'll be generous, Bruce; that was way weak and unbelievably slanted.
You can do better.
-so I'm told....
"If you’re a small investor relying on public information you don’t have a chance."
This makes sense. Those who are better informed can more quickly speed the market to equillibrium and can more easily reap financial rewards from their speculation.
The market's settling of prices depends on the flow of information. I'm opposed to interfering with the flow of market data by locking people who make voluntary exchanges in cages or threatening them with guns.
oh yes, that elitist "efficient markets" bullshit. i'll take "inefficient" over your slippery slope.
I'm not sure if you know anything about the Austrian economics (which Ron Paul - your avatar - follows), but let's see what Austrian economist Rothbard has to say:
"A major difference between the "crime" of insider trading and the other crimes is that insider trading is a "crime" with no victims. What is this dread inside trading? Very simply, it is using superior knowledge to make profits on stock (or other) markets. A terrible thing? But this, after all, is what entrepreneurship and the free-enterprise system is all about... There is, in short, nothing wrong and everything right with inside trading. If anything, inside traders should be hailed as heroes of the free market instead of being apprehended in chains." - http://mises.org/econsense/ch50.asp
Also, I agree with this statement "The profits are so high precisely because the information on which they based their trades is artificially scarce, due to regulations." - http://blog.mises.org/6323/how-dare-they-know-more-than-others/
Rothbard is morally deficient here. Everyone in a company works for its owners, the stockholders. Screwing them by front-running them through purchase or sale of stock on insider info is wrong, legally and ethically. Happens all the time, of course, and if it's BP and GS, well, there is no law that limits their behaviour. Rothbard's kind of world, I guess.
"there is no law that limits their behaviour."
You are wrong. There is contractual law. Market participants - including executives, board members, shareholders, and employees - can always establish contracts. Contracts can restrain the unwanted activity through financial penalties. And if I want insider trading to go in my company, then you are always free to not invest in my company. I don't think it's moral to want to murder me just because I want to do voluntary exchanges in a different way.
It seems that, in your own little world, peaceful and contractual solutions on the market are impossible. The first resort to solving things is to have thugs with guns pay visits to the people you don't like.
Friends-of-Frank, Friends-of-Angelo are what we want our kids to be, when first we seek to tip a friend. Great moral hazard in race to the bottom with no brain needed to play.
(deleted)
your retort is vacuous and much out of context without addressing the moral hazard of the socialization losses resulting from such virtuous intelligence. Obviously, I am not a garden variety libertarian, judging from your selective references.
"Obviously, I am not a garden variety libertarian"
Sorry, based on your avatar, I made an honest mistake.
"Paul has run for President of the United States... first in 1988 as the nominee of the Libertarian Party... Paul adheres deeply to Austrian school economics; he has authored six books on the subject, and displays pictures of Austrian school economists Friedrich Hayek, Murray Rothbard, and Ludwig von Mises" - http://en.wikipedia.org/wiki/Ron_Paul
"oh yes, that elitist "efficient markets" bullshit. i'll take "inefficient" to your slippery slope."
Your statements are uncivil, glib, and vapid.
I never claimed markets are perfectly efficient, but they do tend to be more efficient when government intervention isn't needlessly called upon. I believe that markets are most efficient when it is imperfect human actors, facing financial gains and losses, who act, rather than bureaucracies.
This is mostly a question of personal rights. Why is it criminal to engage in a voluntary exchange based on information one's learned? Who exactly is the victim of this "crime"? Even if you claim "fraud", which I don't think is the case here at all, who is to judge whether the settled upon price is too high or low and whether someone is being cheated?
If you think someone has a tremendous advantage in knowledge on a given good, then you are free to not blindly trade with them. Is a used car dealer a criminal just because the purchaser doesn't bother consulting a mechanic?
"uncivil, glib, and vapid"
thank you for validating my suspicion concerning your ego, "Doctor".
BTW for all you retail stock junkies, there are companies like Mint.com who give aggregated information about spending patterns per region. Use it at your own risk.
You mean like fed cpi data?
Yes, let's take the crooks out, even on a "technicality". In fact, if they have a workforce greater than 1 or if they are a sole proprietor wired to such data I am not privy to, take them out.
Easy Tiger, let's be remembering that when things get out of hand, they often get out of mind. That would be more tragic than in-the-book justice applied relentlessly and fie on the current crop of enforcer-nots.
Answer: No.
This is a thought-provoking article.
Insider trading is trading based on information that not everyone else in the universe has. In other words, it is EVERY kind of trading.
Insider trading is not immoral. If the value of your stocks is damaged because someone else is better informed than you, then too bad. It is only the VALUE of your stocks that is damaged, and not the stock certificates themselves. You still own the stock certificates. Sorry, but you don't own people's subjective appraisals or the market's objective exchange value of a good.
Insider trading hurts nobody's body or property whatsoever. The government should stop wasting our money on prosecuting innocent people for victimless crimes. It is the government's prosecutors that immorally destroy people's lives. Two people who voluntarily exchange goods or share information are blameless.
If you don't like insider trading, then you are always free to only invest in stocks where executives are contractually bound to pay dearly for the undesired activity. Governmental or private arbitrators can then uphold the contracts.
"Insider trading is trading based on information that not everyone else in the universe has. In other words, it is EVERY kind of trading."
That is simply incorrect and clouds the issue.
Insider trading: "a practice in which an insider or a related party trades based on material non-public information obtained during the performance of the insider's duties at the corporation," wikipedia
Can you see the difference?
I'm not quibbling over United States' particular definition of the term.
I'm arguing that it's immoral and unjust to put people in cages, threaten to murder them, or call them criminals just because they are entering into voluntary market exchanges based on something they heard (which may be true or false).
I see no reason why a public release of information (say, a drug receives approval) - which not everyone receives and responds to simultaneously - is any better than the price rising suddenly because insiders are acting on information. When the price begins to rise, shrewd outside investors will know what to do. If the board feels this perq is worth a lot for the executives, then it can decrease other benefits accordingly. Or, if it chooses it does not want this perq for them, it can contractually prevent them from doing it.
Where's the aggression against person or property that justifies the feds intervention and threatening people with lethal force?
But we agree about the Fed at the heart of the bankster racketeering cartel they has destroyed the financial fabric of the western world.