Mike Kueber's Blog

June 22, 2012

Insider Trading

Filed under: Investing — Mike Kueber @ 2:58 pm

Yesterday, the stock market had its second worst day of the year.  The huge sell-off defied easy explanation, but then overnight Moody announced that it was dropping the credit rating of many of the world’s largest banks, a significantly negative development.  From the news reports, I gleaned two issues:

  1. When stock prices tumble, why do analysts report that there were more sellers than buyers?  From my perspective, it seems that there are always the exact same number of sellers and buyers.
  2. Insider trading – i.e., trading based on non-public information – is supposed to be illegal, but based on my experiences with my stocks, I have noticed that stock prices often move dramatically before significant announcements and the movement almost always correctly predicts the effect of the announcement.  This causes me to believe that insiders had non-public information and acted on it. 

Yesterday, I suspect that insiders knew about the Moody downgrading and sold their over-valued stocks to law-abiding rubes.  All the more reason to keep your trading to a minimum.


1 Comment »

  1. shame on you mike, the SEC would nevver allow such a thing…

    Comment by q — June 24, 2012 @ 6:57 pm | Reply

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: