im actually shocked at what i just heard

[Spearhead]

Quote from Maverick74:

The real world simply does not work this way. Look, unless you are talking about some brother in law of a company buying 500 shares of some stock, it's not easy to move size in any market. Size has to be worked. And that order is going to show up on the tape. I know, I use to watch the tape like a hawk back in the day when you could piggyback that size. TA applies to anything that is hitting the tape, inside or otherwise. Orders print on the tape and and that tape draws charts and those charts can be read. There is no way around this.

It will be easy to move the market once insider trading is legalized. Market makers will be antsy about absorbing volume knowing that information could affect them adversely at any second so there'd be less price stability. The Raj Rajaratnams and SAC Capitals of the world would not need to slowly accumulate to stay off the SEC's radar since it would be perfectly legal to throw a few million shares at the market. Sure, they may not do this but since they'd be competing with each other, it would happen relatively fast. You can be sure every officer at a company would be working with outside hedge funds. They would be competing with each other to get the info and price discovery would be IMMEDIATE.

I think this whole argument is fairly ridiculous as there are SO MANY holes that it's unfathomable to me that it would ever be allowed.

How's your tape reading now working on corporate earnings? There are probably illegal insider trading going on ahead of most corporate earnings reports today anyway, so if you think TA works in these situations, you should still be making a killing anyway.

 

[Maverick74]

Quote from Spearhead:

It will be easy to move the market once insider trading is legalized. Market makers will be antsy about absorbing volume knowing that information could affect them adversely at any second so there'd be less price stability. The Raj Rajaratnams and SAC Capitals of the world would not need to slowly accumulate to stay off the SEC's radar since it would be perfectly legal to throw a few million shares at the market. Sure, they may not do this but since they'd be competing with each other, it would happen relatively fast. You can be sure every officer at a company would be working with outside hedge funds. They would be competing with each other to get the info and price discovery would be IMMEDIATE.

I think this whole argument is fairly ridiculous as there are SO MANY holes that it's unfathomable to me that it would ever be allowed.

How's your tape reading now working on corporate earnings? There are probably illegal insider trading going on ahead of most corporate earnings reports today anyway, so if you think TA works in these situations, you should still be making a killing anyway.

Look, nobody is ADVOCATING insider trading. I'm simply making the argument that a little here and there is not that big of a deal. I certainly would not want it legalized. And corp earnings are a horrible example. How many times have you seen a stock blow out numbers and raise their guidance only to be down 10% the next day on sell on the news? Happens a lot. I would never trade inside info on earnings.

And no, people like Steve Cohen would not just buy something with reckless abandonment if he had inside info. Have you ever played poker. If you are holding a full house do you start trying to buy the pot? Of course not. There still is a lot of strategy involved. You don't want to tip your hand.

The funny thing I always hear on ET is that market makers or insiders are actually making something go down so they can buy it to make it go up. LOL. So which is it? Down or up?

 

[Spearhead]

Quote from Maverick74:

I don't think anyone is advocating for insider trading. Just that it doesn't hurt investors if it's minimal.

This is probably one of the reasons why mutual funds, ETFs, lag the theoretical performance of the indexes/assets they're trying to track. Insiders trade on illegal information which causes sub-optimal pricing when mutual funds and ETFs rebalance (forced buys/sells).

Just imagine yourself making random bets on the market. Do you think it's a 50/50 game? If you think so you're mistaken. You are funding BAC/GS/JPM's perfect quarterly prop trading results. You're also funding the Raj Rajaratnams and Steve Cohen's of the world.

I think this problem impacts each individual investor minimally.. perhaps a fraction of a percent off their mutual fund returns, so it doesn't get noticed and nobody will start a riot over it. But collectively, it has a huge impact. I'm not only referring to insider trading of course.. there are tons of questionable things that are taking place to make the market an extremely unfair playing field.

To think you can combat these forces with chart-reading.. well, I will not say that it's impossible, but you must agree that its an uphill fight.

 

[Maverick74]

Quote from Spearhead:

This is probably one of the reasons why mutual funds, ETFs, lag the theoretical performance of the indexes/assets they're trying to track. Insiders trade on illegal information which causes sub-optimal pricing when mutual funds and ETFs rebalance (forced buys/sells).

Just imagine yourself making random bets on the market. Do you think it's a 50/50 game? If you think so you're mistaken. You are funding BAC/GS/JPM's perfect quarterly prop trading results. You're also funding the Raj Rajaratnams and Steve Cohen's of the world.

I think this problem impacts each individual investor minimally.. perhaps a fraction of a percent off their mutual fund returns, so it doesn't get noticed and nobody will start a riot over it. But collectively, it has a huge impact. I'm not only referring to insider trading of course.. there are tons of questionable things that are taking place to make the market an extremely unfair playing field.

To think you can combat these forces with chart-reading.. well, I will not say that it's impossible, but you must agree that its an uphill fight.

I think our monetary policy and fed action hurt investors 1000 times worse then insider trading both on an individual level and collectively.

 

[Spearhead]

Quote from Maverick74:

I think our monetary policy and fed action hurt investors 1000 times worse then insider trading both on an individual level and collectively.

Interesting segway, but sure I'll agree with you on that one and we can agree to disagree on the insider trading.

 

[ElCubano]

If you worked for the city of miami lets say ( mayor or some high office) and you knew ahead of time that a zoning law was going to change and you went out and bought an entire city block because this zoning law would make that block commercial instead of residential and would make it more valuable would that person be transacting in an insider trade? NO or yes.

wether or not there is inside trade, the price will eventually get there on any surprising number or info. It will just get there in a different fashion if the inside info were made legal.

I'm not saying it should or shouldnt be legal...just thinking about it.

 

[Maverick74]

Quote from ElCubano:

If you worked for the city of miami lets say ( mayor or some high office) and you knew ahead of time that a zoning law was going to change and you went out and bought an entire city block because this zoning law would make that block commercial instead of residential and would make it more valuable would that person be transacting in an insider trade? NO or yes.

There is no insider trading in real estate. That shit happens all the time.

 

[emg]

Quote from ElCubano:

If you worked for the city of miami lets say ( mayor or some high office) and you knew ahead of time that a zoning law was going to change and you went out and bought an entire city block because this zoning law would make that block commercial instead of residential and would make it more valuable would that person be transacting in an insider trade? NO or yes.

doesn't matter, they know how to play the game successfully. Same as trading. Those who know how to play the game are a successful traders.

 

[ElCubano]

Quote from Maverick74:

There is no insider trading in real estate. That shit happens all the time.

I know...just asking why it is legal in certain situations and not in others...

I also think that if it were made legal, the people transacting on said info would not profit as handsomely. The price would move away from them quicker. just saying meng

 

[Spearhead]

Quote from ElCubano:

If you worked for the city of miami lets say ( mayor or some high office) and you knew ahead of time that a zoning law was going to change and you went out and bought an entire city block because this zoning law would make that block commercial instead of residential and would make it more valuable would that person be transacting in an insider trade? NO or yes.

wether or not there is inside trade, the price will eventually get there on any surprising number or info. It will just get there in a different fashion if the inside info were made legal.

I'm not saying it should or shouldnt be legal...just thinking about it.

If I'm the residential owner that sold out to the guy, and my real estate broker didn't tell me about the zoning change, I probably have grounds for a lawsuit.

I do think this is one of the ways for corrupt politicians to enrich themselves. Happens a lot in developing nations.