So basically you're not allowed to trade with foreknowledge, it has to be a lottery?
Stocks always seemed like legal gambling to me. If you can't predict it and you can't use any edge that others don't know about, then doing anything but using index funds is gambling, or am I missing something?
Read Matt Lewis and his writings on insider trading. As he would say: Insider trading is about theft. If you pickup a dollar bill on the ground, could you be accused of theft? Probably not...
Regarding differentiating index funds, what are those? When ducking "differentiating index funds", I find results about index funds versus ETFs (afaik an ETF is just a stock) or index funds versus mutual funds (not sure what those are). Are ETFs and mutual funds what you mean by differentiating index funds, or am I looking at the wrong thing?
> Also insurance companies are basically bookies.
Hehe yes, it also occurred to me that being in a car accident is basically winning the insurance lottery that car owners pay into.
This is incorrect. If you trade on material non-public information, it is insider trading.
The only questions you have to ask yourself are:
- is the information material? (would an average investor learning of it impact the stock price or valuation)
- is the information non-public?
If the answer to both of the above is yes, you are insider trading, whether you heard about it from a friend, family member, or overheard someone in a bar. It's not only unethical to trade on such info, it's illegal.
To be clear, these were private companies, so I obviously didn't trade on that information, but I somehow doubt that this guy was really thinking about that when he was trying to impress his date.
Stocks always seemed like legal gambling to me. If you can't predict it and you can't use any edge that others don't know about, then doing anything but using index funds is gambling, or am I missing something?