Wednesday, November 24, 2010

Insider Trading: Where's the Sport in that?

Earlier today James Altucher wrote an article entitled Maybe Insider Trading Should be Legal, outlining a number of possible benefits associated with doing just that.  In my view, insider trading is endemic to people of a certain greed.  A greed that cares nothing about efficient effort and sound gamesmanship for maximizing returns.  Even if insider trading were legalized would an ethical person feel right about partaking in the activity?  What's the point in issuing common equity to everyone if only certain of the players are privy to details?

[ruminations on the risks of unregulated syndicated trading, in a future post]

Legalizing insider trading would be another step on a long, tall staircase toward the cheapening of trust and values in the United States.  As a small, individual trader I once told my buddy that trading against Goldman, HFT, and the Hedgies is like hunting bear with a club - visceral.  It is a challenge, it is heartrending, it is deeply rewarding, and the P/L statement is the scorecard.  But without a tilt of ethical fairness, the score would be meaningless.  The money lends itself to the superiority felt by knowing that you beat the odds.

Ultimately, though, in hunting and in life there exist people who pull on the boots and get dirty, and those that fill the feeders and show up.

In taking up challenge, John F. Kennedy masterfully spoke:
We choose to go to the moon ... and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.