alt Hacker NewsThe insider trading you're allowed to do
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Actually, the real legal insider trading is the trades that you _don’t_ place based on insider knowledge. Eg, if you know that the iPhone is years ahead of everything else and you happen to be holding Apple stock, then you won’t let whoever is managing your portfolio sell any of it when otherwise you may not have cared. There’s no way to prove illegality for _not_ placing a trade.
This is a bad analogy because it perpetuates a misconception of the basis of insider trading law (in the US).
Insider trading has nothing to do with having an information advantage. The markets and their regulators encourage those with an information advantage to use it to as full advantage as they can.
Insider trading is based on having an economic obligation to someone else. If you use your knowledge to make money and you don’t share that equitably with the people you have that obligation to, that’s insider trading (in the US).
You’d have to torture that definition for it to make sense in the job market and none of the examples in the article match.
This is information asymmetry. The nokia engineers knew something that the rest of the world didn't and were able to use it to their advantage.
In any transaction if you know less than the other party, you're at a disadvantage. I was just thinking this morning I could've negotiated a much higher comp for my current job if I knew just some of things about the company I know now.
There are explicit insider trading forms such as SEC forms 3, 4, and 5. Insiders are allowed to trade as long as it is declared to the government. The issue is with trading while having material non public information. Frequently trades are executed on an explicit schedule with rule 10b5-1 to act as a defense against accusations of trading on MNPI.
This is not an “insider trading”, it is an insider’s knowledge (affinity to knowledge) and ability to use it.
How many people think this way, jump ship, and end up being wrong?
Also see the famous case of
https://en.wikipedia.org/wiki/Dave_Mustaine
who left Metallica to found Megadeth.
Good article. I feel this way about my job :/
On the flip side, even if the company is on the way up and you're on some team that's at the center of it and you'll never benefit from it if your manager doesn't like you. All the opportunity to do all the things that lead toward career growth and compensation will go to other people.
I read the article and I’m far more interested in talking about actual legal insider trading in the equities market
You may not be able to trade your company’s stock, or a competitor’s if you have knowledge that was under an employer agreement, but you can trade your sector and correlated assets
You can have an edge, it’s not a legal issue.
Unfortunately doesn't work that smoothly everywhere because outcomes are often tied to larger unknowns whether it is will AI bubble pop or will the global economy take a dip.
Access to internal data isn't a crystal ball
I watched "Enron: The smartest guys in the room" documentary, and I think Lou Pai is the most fascinating character in the story.
As quoted online:
Lou Pai was a senior executive at Enron who, after having an affair with a stripper, to satisfy his divorce settlement, cashed out $250 million of his Enron stock just before the company's stock price collapsed and it filed for bankruptcy protection.
I don't know if he ever knew about the stuff that was going down at Enron, but that guy managed to leave the ship in a nice boat before it sank.