[simonh]

It forces prices to be what people believe to be accurate, where that belief is strong enough for them to put down money on it. I think that may be the closest we're ever going to get.

The bit about belief above is why insider trading is illegal. If people can't trust the information they have, and at least importantly that they have fair access to accurate information, then they won't have faith in markets and won't put down their money. Belief implies trust.

[pis0m0jad0]

I have bad news for you, insider trading isn't about fairness. People trade, legally, on inside information all the time. Adverse selection abounds in markets, so you have to be careful. Insider trading laws are rather about theft: did you illegally appropriate information owned by someone else to benefit yourself and/or a third party? That is insider trading. In the US, it can be even more relaxed than that, with the standard being you had intent.

[lupire]

> People trade, legally, on inside information all the time.

Example?

[simonh]

It may be a contrived definition of ‘insider information’ in an attempt to concoct a controversy. Like a company buying it’s own shares based on its internal knowledge of its condition, or employees buying share options in a scheme for their company. If it was actually an issue I expect it would have been stated instead of coyly implied. Its true not all market participants have access to the same information all the time. The point I made is that this can’t be so skewed or biased that it’s an obstacle to investment.