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Why Not Insider Trade on Every Company?

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Re: Why Not Insider Trade on Every Company?

#121

Post by jlebrech »

nostromo wrote: post #5

It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…

what about making 1000s of trades and cancelling the risky ones via insider info.

then the good trades weren't insider trades?

Re: Why Not Insider Trade on Every Company?

#122

Post by jlebrech »

nostromo wrote: post #5

It's actually still possible to perform a specific type of legal insider trading. Example: you are an executive at E Corp and the company will announce its acquisition in two months. You had previously set up planned trades to sell x number of shares each month before then. Because the acquisition is at a premium on the current price, you will make much less money if you go forward with your trades before the announc…

how about monitoring regular sales for sudden stops and buying those shares?

Re: Why Not Insider Trade on Every Company?

#123

Post by knowaveragejoe »

tertius wrote: post #65
sjg007 wrote: post #42

Earlier quoted context omitted.

What about public disclosure of their stock holdings?

They are disclosed, but offline.

For staff only, for the actual congresspersons they are online:

http://clerk.house.gov/public_disc/financial.aspx

Re: Why Not Insider Trade on Every Company?

#124

Post by lsaferite »

pyre wrote: post #91
coldtea wrote: post #47

Earlier quoted context omitted.

> It makes sense to insulate Congressman from insider trading charges. They are exposed to so much inside information that the executive could bring charges against them on a whim. Which would have significant separation of powers concerns. How about disallowing them to trade altogether in the first place for as long as they hold office?

This would make more sense if there weren't career Congress-critters, though perhaps this would encourage movement in that direction...

Yeah, that is a huge issue in itself. Public office should not be a career but something you take time out of your career to perform.

Re: Why Not Insider Trade on Every Company?

#125

Post by mfisher87 »

Taek wrote: post #82
mfisher87 wrote: post #76

Earlier quoted context omitted.

OK, good idea. Let's make insider trading legal... now NSA employees win and everyone else loses. Seems like a sensible economic system.

You joke, but trading on insider information means revealing that information. It gives people 2 incentives: 1. Trade on your insider information quickly, or someone will beat you to it 2. Keep your secrets safer. It also makes the NSA vulnerable to false planted information. Trading on stolen information means trusting that information.

>You joke, but trading on insider information means revealing that information.

Are you joking here? Let's say, hypothetically, Apple CEO buys a lot of stock today. When you learned that fact, did you learn the facts that motivated him to buy the stock? NO. Absolutely, purely, unarguably NO. Not unless you spoke to him directly and he told you.... truthfully.

This is not a joke. The NSA, or any spy, having access to "all" digital information, can easily differentiate between false and true information, or at least have the opportunity. But you, as an individual, can only act on what is shared directly with you. Making trades does not share any information beyond the fact that the trade was made.

Re: Why Not Insider Trade on Every Company?

#126

Post by dllthomas »

tajen wrote: post #111
rodgerd wrote: post #95

Earlier quoted context omitted.

> The main reason we don't like insider trading is that we like participation in the market by relative amateurs. A system that allows insider trading discourages participation by amateurs, because they do not have insider information. While I agree with that in theory, in practise we see that the rest of the market is so hopelessly skewed in favour of insiders in one form or another it's like a sticky plaster on the…

HFT: I've never understood why stock is traded on a continuous time. In NYC there's a famous crossroad where banks have IT offices, because they want to be as close as possible to the stock exchange's servers, because 50ms latency difference can make them earn a few millions per year. If stock were traded discretely, like every 3 minutes or so, we would allow bids to pile up, and HFT and closer banks wouldn't have an…

If stock were traded discretely, like every 3 minutes or so, it would probably reduce the effect. But a faster turn around would still be an advantage - right before the trade happens you can make up your mind based on more information than others have.

One thought might be to partly counteract that with a transaction cost that rises over the course of the 3 minutes.

Re: Why Not Insider Trade on Every Company?

#127

Post by dllthomas »

mfisher87 wrote: post #125
Taek wrote: post #82

Earlier quoted context omitted.

You joke, but trading on insider information means revealing that information. It gives people 2 incentives: 1. Trade on your insider information quickly, or someone will beat you to it 2. Keep your secrets safer. It also makes the NSA vulnerable to false planted information. Trading on stolen information means trusting that information.

>You joke, but trading on insider information means revealing that information. Are you joking here? Let's say, hypothetically, Apple CEO buys a lot of stock today. When you learned that fact, did you learn the facts that motivated him to buy the stock? NO. Absolutely, purely, unarguably NO . Not unless you spoke to him directly and he told you.... truthfully. This is not a joke. The NSA, or any spy, having access to…

"When you learned that fact, did you learn the facts that motivated him to buy the stock? NO. Absolutely, purely, unarguably NO."

A more charitable (and, as it happens, accurate) reading of the parent's comment is that trading on insider information means revealing some of that information. It's obvious and unarguable that this is not all of that information, but as I've said in other contexts, you're always leaking more information than you think. It's often surprising what can be inferred when a few pieces of information are combined.

Re: Why Not Insider Trade on Every Company?

#128

Post by javert »

harmegido wrote: post #90
javert wrote: post #72

Earlier quoted context omitted.

> Indeed, a slap on the wrist applied very rarely to those white collar criminals unfortunately politically unconnected to face punitive actions and another government initiative that also rarely applies any sort of punishment to the rich and connected. I don't believe this is even remotely accurate. > Meanwhile, on the other side of the tracks - snatched some swisher sweets? That's a shootin. Sass me while black? Th…

He's right though. Nearly a quarter of african americans in Florida are not allowed to vote - thanks in large part to the war on drugs, (well, and probably racism). Meanwhile, relatively very few people go to jail for insider trading. The number of cases in the past 10 years is probably in the hundreds, possibly thousands. Compared to hundreds of thousands of drug cases (maybe millions?).

But they are similar in that they are both totally based on fiction. They are made up laws that serve no purpose.

(Except to employ enforcers---but that isn't why they exist. They exist because people believe the fiction.)

I should have been more specific about the intended nature of the comparison I was making.

Re: Why Not Insider Trade on Every Company?

#129

Post by raisincakes »

kasey_junk wrote: post #69
raisincakes wrote: post #43

Earlier quoted context omitted.

Sadly, insider trading is pervasive on wall street. You don't read about the guys that don't get caught, and there are a lot of them. Remember, if you can't spot the sucker at the table, you're the sucker. That's why I keep my money far away from the stock market except for index funds.

If you believe that the entirety of the market is rigged, what possible reason is there to make an exception for index funds?

Because individual stocks can be rigged in either direction (for or against your position), but at the level of sector or index funds all of that activity balances out.

Re: Why Not Insider Trade on Every Company?

#130

Post by tertius »

sjg007 wrote: post #101
tertius wrote: post #65

Earlier quoted context omitted.

They are disclosed, but offline.

So can you do a FOIA? Or go to an office in DC?

Legislative Resource Center 135 Cannon House Office Building Washington DC, 20515-6612 Phone: (202) 226-5200 Office Hours: 9:00 am - 6:00 pm

You can go here and make copies.

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