I, for one, would like to know the definition of inside information.
It is my understanding that it is possession of information of material import. Thus, I guess we need to know the definition of "material import".
Does material import signify something that could drastically impact the stock price? Then I guess we will need a bunch of psychologists on retainer to provide a discourse on greed and fear, and which is the greater motivator, as well as the causes of such market insanity.
Then we take a look at MSTR's bloodbath today and ask ourselves "did someone have an inkling that bad news was in the offing" when they dropped the price $21/share on Friday.
siliconinvestor.com
Is the information that a wall street analyst possesses "insider" even though it may only incorporate various pieces of a particular material event than he/she puts together from background, open source, or vague conversations filled with "pregnant" hints, with officers of the company?
The bottom line is that each of us knows what kind of specific information/event is, or isn't likely to impact the stock price. Otherwise, we wouldn't be taking a stake in the company based upon some percieved insider information. But the problem is in trying to decide whether what we is event specific, as well as material.
I can give you a prime example of this. Back on Feb 26th, I met a bartender who was moonlighting to augment his regular job. We got to talking and he told me the company he worked for during the day and that they were involved in financial software applications for online banking. I said.. "Wow!!.. sounds pretty interesting... Are you guys busy now?" He tells me that they had been lagging for several years because of Y2K and the IT moratorium that had been imposed on system upgrades. He also told me that Feb 29th was the end of the Y2K lock-in and that they expected many banks had pent up demand for system upgrades. The last thing I asked him was whether anyone had an estimate on where the stock would be by the end of the year to which he stated "between $100-150" (it was trading at $8/share that day).
Well... silly me... I go home and tell the wife about this nifty little company and the conversation I had. I suggested that we should buy the stock (after reviewing fundamentals, technicals, and recognizing the obvious with regard to the Y2K issue) the next day. Well, she liked the company, thought it was a great stock, but she told me she felt uncomfortable about the fact that I derived this information from an employee of the company as she thought constituted "inside info".
Now I told her that no information of material import related to deals, clients, or specific info passed between us (and it didn't). Just what I stated above.
Well.. to sum.. we didn't buy it then... the stock ran from $8 to $20 within 5 days after Feb 29th passed (leap year) and only today retraced to $16 1/2... and I was incredibly p*ssed off that we lost out on the opportunity for a quick 100% move.
I made her call the SEC and speak to one of their lawyers.
What do you think they told her??
(sorry for the length of the post... I just thought it might be relevant).
Regards,
Ron |
