its not about stock price movement. its about ceos enriching themselves at the expense of the public. its basic fairness.
Why is insider trading bad
- Thread starter BDGBDG
- Start date
its not about stock price movement. its about ceos enriching themselves at the expense of the public. its basic fairness.
1. Where did you hear that life was fair?
2. Again, if insider trading was legal, the markets were more efficient. In case of Enron, when those idiots were saying that everything was rosy but they were selling like hell...
3. If you buy a stock based on whatever, it doesn't really matter that you got the stock form a fellow trader or from an insider.
Quote from ElCubano:
1) a big position being dumped into the market does affect price..
Sure. My point was that the insider trader doesn't ALWAY effect the price. Also, would you complain against a hedgefund dumping stocks for whatever reason? That also effects the price...If the insider has a huge position, he would most likely dump it slowly so he would get the most favorable price instead of creating panic...
my point is that their gain is coming from somehwere..the money isnt just coming out of thin air..
Sure, it is coming from the stockmarket. But would you also argue against every successful trader that they are taking money away from you?
2) how does an insider dumping his stock hitting bids help me when i am selling at the same time?[b/]
Now you are arguing that an insider can hurt actually BOTH sides? What if you were already short before he started dumping?
it doesnt
make it right just cuz they get hurt doing it....
True.
You guys didn't address the point of insider trading on good news. In that case everybody makes money (except shorts) so who got hurt?
Let's say some of the GOOG guys loaded up 2 days ago on GOOG stocks...Stock was up 7% or so after earnings...Who got hurt?
1) a big position being dumped into the market does affect price..
Sure. My point was that the insider trader doesn't ALWAY effect the price. Also, would you complain against a hedgefund dumping stocks for whatever reason? That also effects the price...If the insider has a huge position, he would most likely dump it slowly so he would get the most favorable price instead of creating panic...
my point is that their gain is coming from somehwere..the money isnt just coming out of thin air..
Sure, it is coming from the stockmarket. But would you also argue against every successful trader that they are taking money away from you?
2) how does an insider dumping his stock hitting bids help me when i am selling at the same time?[b/]
Now you are arguing that an insider can hurt actually BOTH sides? What if you were already short before he started dumping?
it doesnt
make it right just cuz they get hurt doing it....
True.
You guys didn't address the point of insider trading on good news. In that case everybody makes money (except shorts) so who got hurt?
Let's say some of the GOOG guys loaded up 2 days ago on GOOG stocks...Stock was up 7% or so after earnings...Who got hurt?
where have the morals gone. have morals become such an afterthought that you cant even see a problem with a ceo enriching himself at the expense of the public?
lets look at it another way. if the public is ripped off enough times they may start to consider the stock market a rigged game and avoid it. that is bad for our system of finance. it is all about basic fairness and confidence in a fair market.
If you sell a used car, you are required to disclose if the odometer has been altered. If an insider sells stock, they have to disclose if they have material information. Each duty is required by statue. Common law fraud allowed a seller or buyer to fail to disclose material facts under most situations, provided they did not make affirmative misrepresentations. The law merely treated nondisclosure in the case of an insider the same as an affirmative misrepresentation. Part of the reason for doing that is that you aren't dealing face to face with the insider, so you don't have the opportunity to get an affirmative representation. The other part of the justification is to increase the public's confidence in the integrity of the securities markets.
I tend to be an economic libertarian, but I think the justifications for insider trading are ridiculous and really just a rationalization for crooked behavior.
I have to go along with my friends here (Vhehn and AAA)....If it seem wrong, it probably is. What has always cracked me up is how certain types of people spend months/years figuring out some elaborate scheme/scam to make a few bucks...and, if they would put that much effort into something "real" - they would probably have a higher reward, and lower risk...since the risk is often jail or some really pi#$% off people.
Some of the scenarios remind of Boss Hawg and Duke boys...what could possibly be wrong with any of this, LOL.
Don
Some of the scenarios remind of Boss Hawg and Duke boys...what could possibly be wrong with any of this, LOL.
Don
For every buyer there was a seller or a short seller who didn't have the same information. Like playing poker knowing what someone else has, makes your timing a little easier, dontcha think?
You might enjoy "Bank Shots and other Great Robberies" by Minnesota Fats. Scams are scams. One short story from the book. During the depression, MF and friends are sitting in front of the pool hall when a truck filled with watermelons comes by. MF follows the truck pays the driver to offload and count the watermelons (now having "insider info")...and tells the driver to come back around an hour later. MF brags that his eyes are so good that he can count exactly how many watermelons there are on the truck from a distance, laughs, and says "you guys are so lame, you wouldn't even make that bet"...sounds silly I know, but of course they bet, MF won the money.
Point is that every stock trade is a "bet" of sorts, and if you know the outcome, it makes it pretty unfair. Of course, only an idiot would take a sucker bet, but with "legitimized" stock trading, who the hell knows? LOL.
Don
Come on Dan, have you ever had real DIRTY sex?
It seems wrong, but it ISN'T!!!
Seriously guys, I only defend insider trading because you jumped on the OP like he was naive or the question was obvious.
Well guess what?! The topic is not obvious and it is quite debatable as the lack of arguments on your behalf shows.