I'm skeptical of claims that insider trading is prevalent among those that are not professional traders. I recently analyzed the trading activity of Senators [0], and found the evidence that rampant insider trading to be unconvincing.
In its simplest form, insider trading consists of someone knowing something about performance or similar relative measures that would affect a stock price. But as Matt Levine points out, knowing the future isn't that helpful [1]. Research found that even when it has been proven that professional investors had and acted on insider information, their track record was still spotty.
I even made an app [2] where you can get a companies past and future performance numbers, and you try and guess which of two opposite paths the stock took. I call it the insider trading game, and its a lot harder than it looks.
[edit] Just reminded of the Jim Cramer still showing two headlines: "More than 16M Americans have lost jobs in 3 week, dow's best week since 1938" [3]. I'm skeptical a non-professional trader would be able to somehow deduce strong stock market performance from early access to something like 16mm Americans having lost their jobs in 3 weeks.
[0] https://medium.com/ml-everything/analyzing-us-senators-stock...
[1] https://www.bloomberg.com/opinion/articles/2019-11-26/knowin...
[2] https://insider-trading-game.netlify.com/
[3] https://i.redd.it/rrnajxjdb6s41.jpg
In its simplest form, insider trading consists of someone knowing something about performance or similar relative measures that would affect a stock price. But as Matt Levine points out, knowing the future isn't that helpful [1]. Research found that even when it has been proven that professional investors had and acted on insider information, their track record was still spotty.
I even made an app [2] where you can get a companies past and future performance numbers, and you try and guess which of two opposite paths the stock took. I call it the insider trading game, and its a lot harder than it looks.
[edit] Just reminded of the Jim Cramer still showing two headlines: "More than 16M Americans have lost jobs in 3 week, dow's best week since 1938" [3]. I'm skeptical a non-professional trader would be able to somehow deduce strong stock market performance from early access to something like 16mm Americans having lost their jobs in 3 weeks.
[0] https://medium.com/ml-everything/analyzing-us-senators-stock...
[1] https://www.bloomberg.com/opinion/articles/2019-11-26/knowin...
[2] https://insider-trading-game.netlify.com/
[3] https://i.redd.it/rrnajxjdb6s41.jpg