[quote=kewp][quote=davelj] Inside information is probably the most overrated “advantage” in the financial markets. [/quote]
You should read “Fortune’s Formula”.
If can glean even a slight edge, via inside information, you can generate phenomenal returns.
However, I suspect what you are discussing is the fact that much ‘inside’ information is actually bogus. Which may be true, but I wouldn’t exactly consider it ‘inside’ then.[/quote]
What I’m saying is that most inside information – at least where M&A is concerned – turns out to be wrong (I wouldn’t use the word “bogus”) in the end. Deals are cooked up, rumors start circulating, stock starts moving up and two days before the definitive agreement is signed… oops… one party gets cold feet and the whole thing is off. And there are too many people in on the trade and it blows up. Happens all the time. I was in the middle of plenty of them (albeit on the small side) back when I used to be an investment banker.
It’s still inside information – both “material” and “non-public” – but it turns out to do far more harm than good to those trading on it.
Even today I’m privy to a fair amount of inside information regarding M&A. Even if I were so inclined – which I’m not – I still wouldn’t trade on this information because too many of these deals never get consummated. Things change at the last minute too often for a lot of inside information to be tradeable.
