On 2003-08-07, Steve Schear uttered:
Insider trading brings prices closer to their fair values; insiders enhance market efficiency.
Precisely. In terms of the efficient market hypothesis, all arbitrage possibilities will usually have been exploited by others, so the only consistent way to get a net win is to bring new information into the market. Nowadays insiders can do that, so they win. But the only reason they have their fresh information is that corporations do not give out the details of their work as they unveil, before individual decision makers can easily interfere with their knowledge of the aggregates. Hence, the free market actually encourages full disclosure, in the exact form the No Logo -- or whathaveyou -- anti-globalisation folks want. In the free market, full disclosure boils down to shareholders disliking insider trading, which ought to be a powerful incentive to any management. What the anti-capitalist people do not seem to get is that the *real* problem originates with SEC oversight and its international counterparts, and not with the private market. It's tragic, really. The market usually tends to more democracy and openness than democracy itself, yet the people raving about the necessity of democratic decision making always push for more oversight. While doing so, they hurt their own interests, and ours too. That's just stupid, plain and simple. -- Sampo Syreeni, aka decoy - mailto:decoy@iki.fi, tel:+358-50-5756111 student/math+cs/helsinki university, http://www.iki.fi/~decoy/front openpgp: 050985C2/025E D175 ABE5 027C 9494 EEB0 E090 8BA9 0509 85C2