Insider trading is one of the most controversial aspects of securities regulation, even among the law and economics community. One set of scholars favors deregulation of insider trading, allowing corporations to set their own insider trading policies by contract. Another set of law and economics scholars, in contrast, contends that the property right to inside information should be assigned to the corporation and not subject to contractual reassignment. Deregulatory arguments are typically premised on the claims that insider trading promotes market efficiency or that assigning the property right to inside information to managers is an efficient compensation scheme. Public choice analysis is also a staple of the deregulatory literature, arguing that the insider trading prohibition benefits market professionals and managers rather than investors. The argument in favor of regulating insider trading traditionally was based on fairness issues, which predictably have had little traction in the law and economics community. Instead, the economic argument in favor of mandatory insider trading prohibitions has typically rested on some variant of the economics of property rights in information. A comprehensive bibliography is included. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=132529
I think the WTF here is that you're listening to Kudlow and are shocked. If this is the first time you've found Kudlow or his guests offensive then I suggest you listen more carefully... or perhaps obtain some balance in your media diet. cheers
Let's add this IF a few people use insider information AND IF there are very technically savvy traders THEN it may give those traders an edge. What helps one may hurt another, that would be the market makers. IF all insiders traded then BOTH savvy and NON savvy traders would be hurt and the market itself would be a joke. Most of the insiders already have select advantage and certainly don't need more. I would guess that they already have significant "legal" advantage. Honestly, I would like to see them bust all the crooked hedge funds/insiders because it takes away from the glory.. They are trying to steal glory that isn't theirs. They are also stealing business from legitimate traders.
pretty specious argument. if the insider has good news, then the investor will pay MORE for his shares if he is buying after the insider, but before the news. if its bad news he will get less for his shares if he is selling after the news, as the insider has already hit bids and has taken liquidity that may have been there without his selling. basically, someone using information that is accurate but hidden from your view, will pick your pocket every time.
Yes, and if the news is announced in a press release, you also pay more if you want to buy or sell for less if you are trying to sell. It is more a moral case against systematic or unfair advantage rather than something that helps small investors.
A technician see a gap. A technician will wait to see if that gap fills, or using the base of the gap as a pivot, price fails to return to the base of the gap. A technician does not buy or sell into a gap. Do not try to catch falling knives.
I agree. Look, I think we can all agree that everything is working against the little guy that puts no effort towards this. Inside information or not. The little guy is always chasing things up to get in and chasing things down to get out. Insiders have zero effect on the little guy. The argument is purely moral and about the integrity of the financial system.
Thanks. This is the only post here that makes any sense. I can't fathom how insider trading can possibly help the small investor unless you're selling a TA system and want to spin an argument for your system.