[myrmidon]

I'd argue that the "purpose" of the stock market is matching investors with companies that want liquidity. Allowing insider trading hurts the purpose by driving away non-insider trading participants, and it does not really help in any way.

With prediction markets, the "purpose" is information discovery, and "insider trading" actually helps (=> via information from insiders).

Disclaimer: I'm somewhat playing devils advocate here, I personally think that prediction markets are for now mostly an ineffective zero-sum game (and legalized gambling with all the drawbacks that brings).

[Joker_vD]

> I'd argue that the "purpose" of the stock market is matching investors with companies that want liquidity.

But you don't usually buy the stocks from the company itself, do you? Unless there is some shenanigans with buyouts going on...

[hrimfaxi]

Companies can issue new shares to take advantage of positive public sentiment.