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In America, this kind of research in explicitly encouraged, and very much NOT insider trading according to the SEC. Insider trading has to involved _theft_, not

In America, this kind of research in explicitly encouraged, and very much NOT insider trading according to the SEC. Insider trading has to involved _theft_, not just insider knowledge. If you overhear someone talking about an impending acquisition in a coffee shop, and you trade on that information, you're quite safe in the US. European countries can and do consider that insider trading, though.

jdironman 8y ago
Really? I did not know that at all. I say legal insider information is a very, very interesting market then.
- claytonjy 8y ago
  Well, the whole point of markets is to incorporate information into the price. So if I've done research and think company X is undervalued, I'm going to buy its stock, the price is going to go up, and now that research of mine is better incorporated into the stock price of X. As long as I didn't _take_ that info from anyone (e.g. I can't hack emails, or bribe an accountant, etc. etc.), this is markets behaving exactly as we want them to.
  - jdironman 8y ago
    Oh, okay. I think I see now. The stock market has always fascinated me and I admit I understand very little of it. I wouldn't know where to start learning about the ins and outs of it.
    - claytonjy 8y ago
      I'm short on good resources, but you might enjoy Matt Levine's Money Stuff newsletter; I always look forward to reading it, and all of this "what is insider trading" comes directly from his writing in recent weeks. You can read some of them on bloomberg, or get the emails each day for free here: http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-signup http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-s...
budu3 8y ago
I thought that inside info was non-public material info and so air-traffic data is not non-public per-se and so it's fair game. No?
- pmart123 8y ago
  Well, it is publically available in that anyone can subscribe and get the data. I’d venture to guess anyone can get the tail number flight patterns from the FAA. The value add is matching that to who owns or is leasing the plane.
- claytonjy 8y ago
  Yeah, "non-public, material information" is what I'm used to seeing, and I think that classifies this air-traffic data just fine. The coffee shop example, however, sounds like it's both non-public and material, yet in the US is not considered insider trading. So you might say "non-public material information" is necessary, but not sufficient, grounds for an insider trading case.
- throwawaymath 8y ago
  No. You can trade on material, nonpublic data as much as you'd like. Insider trading is not illegal unless you're breaking a confidentiality agreement or fiduciary duty. If you manage to discover confidential data in a way that does not compromise such an agreement or duty, you're fine. Obviously you should engage with an attorney instead of taking legal advice from a random HN comment, but there's really no issue with this. Information asymmetry is a fundamental part of the market and not illegal on its own. Source: I used to work in financial forecasting using significant amounts of alternative data.

jdironman 8y ago

Really? I did not know that at all. I say legal insider information is a very, very interesting market then.

claytonjy 8y ago
Well, the whole point of markets is to incorporate information into the price. So if I've done research and think company X is undervalued, I'm going to buy its stock, the price is going to go up, and now that research of mine is better incorporated into the stock price of X. As long as I didn't _take_ that info from anyone (e.g. I can't hack emails, or bribe an accountant, etc. etc.), this is markets behaving exactly as we want them to.
- jdironman 8y ago
  Oh, okay. I think I see now. The stock market has always fascinated me and I admit I understand very little of it. I wouldn't know where to start learning about the ins and outs of it.
  - claytonjy 8y ago
    I'm short on good resources, but you might enjoy Matt Levine's Money Stuff newsletter; I always look forward to reading it, and all of this "what is insider trading" comes directly from his writing in recent weeks. You can read some of them on bloomberg, or get the emails each day for free here: http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-signup http://link.mail.bloombergbusiness.com/join/4wm/moneystuff-s...

budu3 8y ago

I thought that inside info was non-public material info and so air-traffic data is not non-public per-se and so it's fair game. No?

pmart123 8y ago
Well, it is publically available in that anyone can subscribe and get the data. I’d venture to guess anyone can get the tail number flight patterns from the FAA. The value add is matching that to who owns or is leasing the plane.
claytonjy 8y ago
Yeah, "non-public, material information" is what I'm used to seeing, and I think that classifies this air-traffic data just fine. The coffee shop example, however, sounds like it's both non-public and material, yet in the US is not considered insider trading. So you might say "non-public material information" is necessary, but not sufficient, grounds for an insider trading case.
throwawaymath 8y ago
No. You can trade on material, nonpublic data as much as you'd like. Insider trading is not illegal unless you're breaking a confidentiality agreement or fiduciary duty. If you manage to discover confidential data in a way that does not compromise such an agreement or duty, you're fine. Obviously you should engage with an attorney instead of taking legal advice from a random HN comment, but there's really no issue with this. Information asymmetry is a fundamental part of the market and not illegal on its own. Source: I used to work in financial forecasting using significant amounts of alternative data.