4 ms·

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

Taek 11y ago
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.
- pyre 11y ago
  > trading on insider information means revealing that information Did I miss the blank space on the form that requires you to fill in the reason for your trade before it gets executed? Joking aside, you do not reveal your intentions by executing a trade. Let's look at a hypothetical. Say all of the sudden someone dumps 5% of Apple stocks. Information has been imparted, but this is imperfect information. If you own Apple stock and you are weighing your options, you can't know the real reason behind these trades. If you did know the real reason behind the trades (e.g. announcement of a 1% dip in growth in Q4 2015) you could evaluate what you think that does to the value of the stock instead of trying to reverse engineer someone else's logic. Another Example: How about knowing that someone will happen in ~2 months time, so you slowly sell stock off over 2 months. How does this impart significant information to the market?
- mfisher87 11y ago
  >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.
  - dllthomas 11y ago
    "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.

Taek 11y ago

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.

pyre 11y ago
> trading on insider information means revealing that information Did I miss the blank space on the form that requires you to fill in the reason for your trade before it gets executed? Joking aside, you do not reveal your intentions by executing a trade. Let's look at a hypothetical. Say all of the sudden someone dumps 5% of Apple stocks. Information has been imparted, but this is imperfect information. If you own Apple stock and you are weighing your options, you can't know the real reason behind these trades. If you did know the real reason behind the trades (e.g. announcement of a 1% dip in growth in Q4 2015) you could evaluate what you think that does to the value of the stock instead of trying to reverse engineer someone else's logic. Another Example: How about knowing that someone will happen in ~2 months time, so you slowly sell stock off over 2 months. How does this impart significant information to the market?
mfisher87 11y ago
>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.
- dllthomas 11y ago
  "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.