Selection bias.
They even have code words for the names of well known insider traders, e.g. Jacob Rees-Mogg, the UK politician is known as the “profiteering ghoul” because his massive short on the pound, why else was he pushing Brexit so much? The will of the people? Get real
Which makes sense, do you think that given the financial amounts involved, and the only thing stopping most people is ethics (and knowledge that it’s illegal but easy to get away with) that it wouldn’t happen??
aehm, no it's not.
just google Somerset Capital, e.g. https://ftalphaville.ft.com/2018/02/08/2198570/jacob-rees-mo...
It’s not open to the public, you need a shibboleth
A better question would be "why do you think these specific people are coordinating with each other?".
Uhh citation required
Example: I know for a fact that 9/11 was inside job. I communicate in a private think group, so you can take my word for its truth.
In 2016 or recently? because if its recently then the pound has gone up.
Arguably he paid long term capital gains on a basket that should have been short term capital gains.
But his system of short term, automated, stat arb / signal detection based trades are clearly not based on classified corporate data.
I suggest you read The Man Who Solved the Market for more info.
"There's zero evidence that Simons and Renaissance do any insider trading." Is a better way to state it.
But all evidence points to a system that runs in a mostly automated manner, which would be the opposite of what you'd expect from an insider trader.
Someone who makes "gutsy calls" based on "intuition" like Steve Cohen is what I think most successful insider traders would look like.
Consider the stakes - you have a multibillion dollar sub-portfolio (Medallion has current AUM of $118B according to some random site called InsiderMonkey, idk whether its legit or not). In 2016, the AUM was reported at $76B. His returns literally don't make any sense. You can't be right all the time. Anyways, so literally you wanna use a small fraction of that to fund the construction of a small discreet, strategic team that acquires information to gain edge in public markets. Simons has background in signals intelligence, and despite his later work, wouldn't it be an extremely obvious avenue to just forcibly acquire knowledge that is non-public and then place trades accordingly?
Simplest explanation is its definitely illegal. Every couple years, you hire some algebraic geometry PhD and boom, you chalk up all your returns to magic math. Doesn't make any sense.
If you simply bought the S&P 500 in Jan 2016 and held until now, you are up 78%. (76 goes to 135)
If you bought in Dec 2016 and held til now, you’re up 49% (76 goes to 113)
I find “they roughly tracked the market over the time cited” to be a far simpler explanation than “they’re definitely doing illegal insider trading and covering it up with math mumbo-jumbo.”
Seems like they do well during downturns too?
The entire Renaissance org is pretty walled-in, and in my opinion it is pretty obvious that based on returns they must be exploiting an edge that treads the line of legality.
Take a look at their basket options tax strategy (documented by Levine, look for "incantations+Levine" on your favorite search engine).
Link to article I was referencing: https://webcache.googleusercontent.com/search?q=cache:4l2vAb...
Here's a pastebin of the content in case you can't access the above: https://pastebin.com/43hjkBQe
It's pretty easy to construct a scenario where "oh yes he is omniscient and thereby he can easily draw returns from a bustling market" but it's even easier to construct a scenario where fraudulent activity is occurring and those same returns are being derived from expert-level fraudulent activity.
No one is accusing a buy-and-hold investor like WB of committing illicit activities. Seriously, no one. OTOH, I think it is quite reasonable to suspect that the premier quant trader of all time, with those stellar YOY returns is extracting alpha via strategies that are "dumb" and "always work", i.e. his primary edge. These strats probably exist in the grey area of financial structuring and trading activity (if not worse).
Seriously. Just look at the yearly returns time series. (Acquiring the yearly financial statements is left as an exercise to the reader).
I mean yeah I think he's awesome too. But thinking he's some kind of market savant in a post-Madoff world is really quite silly, in my opinion.
Sometimes the news is "good" but doesn't meet expectations, so the stock drops. Maybe it was already priced in. Sometimes the news is "bad", but better than expected, so the stock goes up. Maybe that was already priced in, too.
Either way "just looking at stocks before a major announcement" isn't going to get you anywhere fast.
On top of that, the president and all of congress literally cannot be convicted of any crime while in office and they pretty much all engage in massive and rampant insider trading.
And "Why is this downvoted? This is an openly true fact."
Apparently, they equal influencing the market to insider trading.
Trumpians: Trump is a genius playing 16D chess over everyone's game of chutes and ladders!!!!
OMB-ppl: OM is a baby in a diaper and needs the nanny to wipe his ...
Also OMB-ppl: He's a conniving insider trading, evil, russian puppet!!! Being used by Kim Jong Un and the young turks!!!!
Reality: His tweets are direct thoughts from his head, no one sees them before they're sent out and he doesn't even look them over for spelling and grammar mistakes.
Also Planet Money tried to trade based on his tweets and found you'd be better off just picking a random index fund or using the S&P. (That's including the followup episode where they got a less naive algorithm.)
PS. My opinion: I've only just started watching southpark but it seems they've hit the nail on the head about him, he's probably a tiny bit more charismatic, but really he's just doing this because people mocked him and he didn't think he would win. If you take an objective look at what he's accomplished and what he wants to do he's doing a perfectly average job. Every president in recent memory has abused the office for personal gain: Clinton got sex, Bush got back at the ME for embarrassing pops, Obama deputized the IRS and now Trump asked the Ukrainians to "take care of" Biden. I don't think he's a great president, but anyone calling him satan has an agenda that involves some law-breaking, possibly "light" treason.
At least one of those is clear propaganda talking points you picked up from less-than ingenuous sources:
"In 2013, the United States Internal Revenue Service (IRS) revealed that it had selected political groups applying for tax-exempt status for intensive scrutiny based on their names or political themes. This led to wide condemnation of the agency and triggered several investigations, including a Federal Bureau of Investigation (FBI) criminal probe ordered by United States Attorney General Eric Holder. "
"In January 2014, James Comey, who at the time was the FBI director, told Fox News that its investigation had found no evidence so far warranting the filing of federal criminal charges in connection with the controversy, as it had not found any evidence of "enemy hunting", and that the investigation continued. On October 23, 2015, the Justice Department declared that no criminal charges would be filed. On September 8, 2017, the Trump Justice Department declined to reopen the criminal investigation into Lois Lerner, a central figure in the controversy.[1]
In late September 2017, an exhaustive report by the Treasury Department's Inspector General found that from 2004 to 2013, the IRS used both conservative and liberal keywords to choose targets for further scrutiny.[2][3] " [0]
> ... and now Trump asked the Ukrainians to "take care of" Biden. I don't think he's a great president, but anyone calling him satan has an agenda that involves some law-breaking, possibly "light" treason.
Please elaborate on this agenda, seeing as he's the one openly and admittedly breaking (at least in case of anyone not a sitting president) laws.
> Reality: His tweets are direct thoughts from his head, no one sees them before they're sent out and he doesn't even look them over for spelling and grammar mistakes.
Either he's ignorant of the effects [1] and thus an idiot, or he's aware and rationally acting on said information. Pick one. If he's aware and not wanting to act unethically, he wouldn't keep tweeting the same way.
Timings should be measurable too though.
If the news is already out, his tweet doesn't even change the timing.
And yet a key HDD seems to have failed, Which magically was the only source of all email about this.
I'm not really interested in arguing about this. we could go point for point all week. But the "exhaustive report" is mostly before Obama was president, so it's not surprising that it found both sides were targets. It would be more interesting and conclusive if from 2010-2016 no wrongdoing was found. Wonder why in 2017 they choose to look from 2004 until only 2013....
Also calling my talking points less-than ingenuous while quoting obviously controversial wikipedia articles is not a good look. (especially when we know that both sides use wiki to sow falsehoods).
> Please elaborate on this agenda, seeing as he's the one openly and admittedly breaking (at least in case of anyone not a sitting president) laws.
Seeking to depose the president because you don't like him is treasonous. So far the drafted AoI don't contain anything that 99% of objective people would consider impeachable.
> Either he's ignorant of the effects [1] and thus an idiot, or he's aware and rationally acting on said information. Pick one.
Easy, he's ignorant. Don't think that makes him an idiot, he's just human. His tweeting pattern hasn't changed much since he got elected. The content is even fairly similar. Is Elon an idiot? Better yet, are all twitter users idiots? they enjoy sharing their ideas online they don't think past the fact that what they consider a joke or insignificant is seen as market moving by others. I think we can all agree that Musk doesn't make the best choices when it comes to twitter but we can also agree that he's far from a fool.
For better or worse most people treat twitter as their personal-public diary and no one is considering the consequences of what they write in their diary.
Your need to seek malice speaks volumes about your ability to be objective about this.
I don't plan on responding to you anymore because I hate this type of argument. you are definitely not gonna be moved and are probably stewing right now at all my alt-facts and "fake news" and I spend all day reading the talking points you're throwing at me from CNN, NPR, vox and already have my responses queued up. Let's just agree that you think OMB and I think he's more of the same.
Or one out of tons of specific companies:
https://www.washingtonpost.com/news/the-fix/wp/2016/12/06/di...
But organised crime is an ongoing concern.
Well, the ones getting caught definitely aren't.
It’s one of Matt Levine’s satirical rules of insider trading not to do that.
That was actually just the take from one earnings announcement, not the entire scheme. It says elsewhere they cleared $7m in the first year.
Fortunately, the world has never had a shortage of idiots.
but if you work for the same company its best not to do the trade at all
instead of looking for an 8% move, just get the 2% move in the ETF that the company is part of. there is a prohibition that extends to derived or linked securities, but this is much harder to detect and prove. its just ammunition without a weapon
but really, better to play the sector as a whole. if I worked for Expedia and saw what affected their earnings, I would trade Priceline expecting exposure to the same trends.
I used to develop and sell novel earnings forecasts which would outperform analyst consensus. Typically my research would have a <1% margin of error on forecasting a specific KPI directly relevant to corporate revenue and profit for an equity. The best hedge funds were able to successfully trade on this information because they combined it with a significant amount of complementary data.
But I would not want to develop a trading strategy based on that data alone. These guys did very well considering the information they had to work with and how primitive trading earnings is. The real money in insider trading is in more illiquid OTC markets, or in mergers/acquisitions.
[1]: http://chloexie.com/pdf/ChloeXie_JMP.pdf
[2]: https://www.bloomberg.com/opinion/articles/2019-11-26/knowin...
This one's easy. Buy shares of the acquisition, wait for a 10%-50% pop on the news.
Trading on earnings is hard. Even if you check earnings against estimates, did they beat the street? How's the forward guidance look? And you only get four shots per year.
> ..A former IT administrator then at Palo Alto Networks Inc., was at the center of the trading ring, using his IT credentials and work contacts to obtain highly confidential information about his employer’s quarterly earnings and financial performance.
How they were caught:
> This case highlights [SEC's] use of enhanced data analysis tools to spot suspicious trading patterns and identify the traders behind them.
Total estimated profit from this scheme, between 2015~17:
> Defendants’ trades in advance of the announcement generated profits that exceeded $3 million.
EDIT: Oops, I found this line from the same source: "At the peak of their scheme in 2017, [the defendants] achieved more than $7 million in illegal trading profits."
(Source: https://www.sec.gov/litigation/complaints/2019/comp-pr2019-2...)