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Insider trading is a distortion of price discovery, because the insider possesses knowledge the rest of the market does not. That's why it's illegal. Insider t

Insider trading is a distortion of price discovery, because the insider possesses knowledge the rest of the market does not. That's why it's illegal. Insider trading is not real buy-side demand pricing information because the insider (typically) intends to sell as soon as the price pops, once more market participants have been pulled into the trade because it's going up -- key knowledge the insider knew the market did not. Markets as a price discovery mechanism relies upon all participants having access to the same information. Insider trading clearly breaks that fundamental rule.

prvit 4y ago
> Insider trading is a distortion of price discovery, because the insider possesses knowledge the rest of the market does not. That's why it's illegal. Insider trading is not illegal because insiders possess knowledge the rest of the market does not. Insider trading is illegal because it creates a false perception of unfairness among less sophisticated market participants. (There are other decent reasons too, Matt Levine has written about this extensively too. Yours isn’t one of them) > Markets as a price discovery mechanism relies upon all participants having access to the same information. Insider trading clearly breaks that fundamental rule. This only makes sense in a context where all parties have access to equal resources, but that’s not true. A hedge fund paying visa for transaction flow, or flying spy planes above a factory to track production will have more information than other participants.
- ajsharp 4y ago
  You're so far down the contrarian rabbit hole on this take, you're arguing the nuances of why, precisely, insider trading is illegal. It doesn't really matter why, it is, and for good reasons (agree with or don't, whatever). This ain't the hill.
  - prvit 4y ago
    It’s not a “contrarian rabbit hole”. Whether or not insider trading should be illegal is a hotly contested topic among economists. >It doesn't really matter why, it is, and for good reasons Would you like to share the good reasons why it doesn’t matter?
    - ajsharp 4y ago
      Because if you do it you're going to jail if you get caught.
      - prvit 4y ago
        And you believe that the reasoning behind jailing people is not to be discussed beyond “that’s the law”?
        ajsharp 4y ago
        That's obviously not what I'm saying; you're being difficult for the sake of argument. I've already stated why insider trading is and should be illegal.
  - stjohnswarts 4y ago
    They're literally arguing it from the selfish position of an insider trading rather than from the general societal and market benefits. I agree with you 100%
    - prvit 4y ago
      That’s a dishonest interpretation of my arguments and you know it.
      - stjohnswarts 4y ago
        I don't think so; it's completely honest. but we can agree to disagree.

prvit 4y ago

> Insider trading is a distortion of price discovery, because the insider possesses knowledge the rest of the market does not. That's why it's illegal. Insider trading is not illegal because insiders possess knowledge the rest of the market does not. Insider trading is illegal because it creates a false perception of unfairness among less sophisticated market participants. (There are other decent reasons too, Matt Levine has written about this extensively too. Yours isn’t one of them) > Markets as a price discovery mechanism relies upon all participants having access to the same information. Insider trading clearly breaks that fundamental rule. This only makes sense in a context where all parties have access to equal resources, but that’s not true. A hedge fund paying visa for transaction flow, or flying spy planes above a factory to track production will have more information than other participants.

ajsharp 4y ago
You're so far down the contrarian rabbit hole on this take, you're arguing the nuances of why, precisely, insider trading is illegal. It doesn't really matter why, it is, and for good reasons (agree with or don't, whatever). This ain't the hill.
- prvit 4y ago
  It’s not a “contrarian rabbit hole”. Whether or not insider trading should be illegal is a hotly contested topic among economists. >It doesn't really matter why, it is, and for good reasons Would you like to share the good reasons why it doesn’t matter?
  - ajsharp 4y ago
    Because if you do it you're going to jail if you get caught.
    - prvit 4y ago
      And you believe that the reasoning behind jailing people is not to be discussed beyond “that’s the law”?
      - ajsharp 4y ago
        That's obviously not what I'm saying; you're being difficult for the sake of argument. I've already stated why insider trading is and should be illegal.
- stjohnswarts 4y ago
  They're literally arguing it from the selfish position of an insider trading rather than from the general societal and market benefits. I agree with you 100%
  - prvit 4y ago
    That’s a dishonest interpretation of my arguments and you know it.
    - stjohnswarts 4y ago
      I don't think so; it's completely honest. but we can agree to disagree.