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The people who don't have insider information. When you adjust for the value actually created by a company, the stock market is a zero sum game. Insider trading

The people who don't have insider information. When you adjust for the value actually created by a company, the stock market is a zero sum game. Insider trading moves profit allocation from evenly divided among shareholders to an uneven allocation where shareholders with inside information earn a greater than owed share of the upside.

alasdair_ 7y ago
>When you adjust for the value actually created by a company, the stock market is a zero sum game. Not really. For example: if I am a terminal cancer patient that wants liquidity now to do the things I want to do before I die, and you are a pension fund that only really cares about the return thirty years from now, I can trade the stock that I have to you in exchange for money I can spend right now at a price both of us agree on and (this is the important bit) BOTH of us gain from the transaction.
- clort 7y ago
  The terminal cancer patient and the pension fund are not the entire field of shareholders. Your scenario does not contradict the idea of a zero sum game for the whole stockholdings of a company, or the stockmarket as a whole.
smabie 7y ago
Maybe, but what’s more likely in such a scenario would be that the edge gained by insider trading would entirely evaporate. But more to the point, it’s corporations not people who have a rational interest in keeping insider trading illegal. After all, individuals who are insider trading on a company are effectively stealing from said company. Since the corps don’t want their employees taking their money, they have strong incentives to support very tough insider trading laws. In my opinion it should be a civil matter, but the corps and the government have very effectively sold the “stealing from the working man’s retirement fund” in order to justify some very aggressive tactics, previously only reserved from the Mafia and the like.

alasdair_ 7y ago

>When you adjust for the value actually created by a company, the stock market is a zero sum game. Not really. For example: if I am a terminal cancer patient that wants liquidity now to do the things I want to do before I die, and you are a pension fund that only really cares about the return thirty years from now, I can trade the stock that I have to you in exchange for money I can spend right now at a price both of us agree on and (this is the important bit) BOTH of us gain from the transaction.

clort 7y ago
The terminal cancer patient and the pension fund are not the entire field of shareholders. Your scenario does not contradict the idea of a zero sum game for the whole stockholdings of a company, or the stockmarket as a whole.

smabie 7y ago

Maybe, but what’s more likely in such a scenario would be that the edge gained by insider trading would entirely evaporate. But more to the point, it’s corporations not people who have a rational interest in keeping insider trading illegal. After all, individuals who are insider trading on a company are effectively stealing from said company. Since the corps don’t want their employees taking their money, they have strong incentives to support very tough insider trading laws. In my opinion it should be a civil matter, but the corps and the government have very effectively sold the “stealing from the working man’s retirement fund” in order to justify some very aggressive tactics, previously only reserved from the Mafia and the like.