alt Hacker NewsSo if this sort of "insider trading" is bad, what does this mean for other sorts off strategies hedge funds do to get an edge, like flying helicopters to look at how full oil storage tanks are? Should that be banned too? The article basically argues that any sort of edge is bad because it disincentivizes others from participating.
edit: see my subsequent comment. I'm not saying corruption is good. The whole point of the article is that it's bad beyond just corruption, and that's the point I'm pushing back on.
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Gee, what could go wrong using governmental info to provide personal gain? Surely they wouldn't be tempted to start causing situations to become reality for personal gain! (ala Dick Cheney and Halliburton.)
Politician are servants of the people, for the people. This involves sacrifice and following the law. (I realize this is a naive statement, but shouldn't we be jailing these law breakers?)
> So if this sort of "insider trading" is bad, what does this mean for other sorts off strategies hedge funds do to get an edge, like flying helicopters to look at how full oil storage tanks are?
This is allowed because you've gotten that extra information through your own methods that in theory anyone else can get access to. The problem here is they're using information that nobody else could possibly have access to, therefore its "insider" trading and it's been illegal for a long time.
If the market wants to incentivize flying a helicopter to bring it information about the real world, that's somewhere between ok and good.
If the market wants to incentivize pumping and dumping the American economy by releasing a stream of fake news from the US President, that's bad.
We should tilt the arbitrary rules away from the bad things and towards the good things.
If those hedge funds are doing something that stops the market from functioning then of course there should be intervention but it doesn't seem clear to me at all that hedge funds trying to get an edge (especially in a way that's replicable by other funds) has the same effect as rampant insider trading in regards to destroying the market.
> like flying helicopters to look at how full oil storage tanks are
Unless the helicopter is dropping a bomb on a school on the way there (or back) I am not sure that the comparison is fair.
HN will never stop surprising me with it's takes on how it's okay to make money at anyone else's expense regardless of laws, ethics or harm done
Wait, those big oil tanks don’t have lids? Doesn’t that mean rain would mix with the oil??
There are differences between the insider trading and your helicopter example. The theory is the better traders know the reality when making decisions, the better. When oil traders hide information about their reserves, they are working on creating a rift between the reality and the public knowledge. Helicopter is overcoming it. When Trump makes empty announcements that change prices in a purely speculative manner, but before doing this he buys futures, he is just creating instability on the market and he exploiting it. Instability is bad, the whole idea of futures is to deal with the risks stemming from the instability.
Instability is bad, but when the cause of it is market getting new information, it becomes ok: it is bad now, but it is good in the long term. But when the instability becomes a source of profits, when there are incentives and means to create the instability, then long term benefits go away.
Considering the very House, Senate, and connected buffoons with the presidency are all in on insider trading and corruption... Why shouldnt others?
Hell, being a congresscritter in charge of oversight of $industry allows you to cheat the public cause you know what's coming. How else do you see a senator making $174k/yr but net worth's of $100M? Its legal, only cause they carved their own exemptions and scam the public.
I think Matt Levine’s take on this is best, in that the problem here is _theft_: https://www.bloomberg.com/opinion/articles/2019-03-13/you-ha...
> The real issue is never whether the trading was unfair to the people on the other side; it’s whether the information was misappropriated from its rightful owners
In this case the rightful owners are the American public in whose employ the leakers are. They got this information from their position of trust, and sold that information, to the disadvantage of the people they work for.
This kind of "well eksuallyyyy" argument isn't very useful or good faith when a systemic harm is highlighted. It's just contrarian muddying of the conversation.
The numbers are big enough that I kind of suspect it's the various funds that are doing it. They've probably have some legal gray area intel they're leveraging like paying a guy who knows a guy overseas who knows a guy who's a l33t h4x0r (i.e. someone who got erroneously invited to a group chat).
This insider trading isn't hedge-funds working hard to get an edge. It's political insiders trading ahead of public statements. They are getting gains not by dint of being incredibly smart, nor from working very hard. Instead its from abusing their position in power. And by doing so in this manner, they are taking money away from the actual productive people trading in the futures market.
Besides, as Matt Levine often says. In the US, insider trading is a matter of miss-appropriating information when you have a duty of confidentiality. Its not about trading when you know more than someone else. Its about trading when you know something your not supposed to share.