MARK TO MARKET: An Insider Can't Be An Outsider
12 Feb 07:30
By Jim Murphy
A Dow Jones Newswires Column
NEW YORK (Dow Jones)--Gee whiz, what's the point of being an insider if you
can't trade on it?
Admit it. We have always lived in the Animal Farm world of George Orwell
where "`some pigs are more equal than others."
Tuesday, we learned that the CFO of Nortel Networks had to, in the words of
Clifford Odets in "Waiting for Lefty," "take a run-out powder."
It seems that the CFO moved some of his Nortel shares to and fro "outside the
trading windows imposed by the corporation," in the quaint language of the
Nortel press release.
I won't identify the guy. His name is already out and about. He doesn't need
me to enhance the public tut-tutting.
Insider trading may be scorned by the scrupulous, but in one sense, at least,
it is impossible to avoid.
An executive at XYZ Corp., who knows his company is in for some rough
sledding and that indications of that will have to be publicly disclosed soon,
is highly unlikely to add to his holding of XYZ shares.
Call this, if it makes you feel better, "insider non-trading."
The XYZ executive refrains from buying his company's shares based on
information beyond the reach of us outsiders who, in our ignorance, might well
buy them.
But what else would you have the dude do? Buy XYZ when he's virtually
certain the shares will test their 52-week low next week?
That perhaps altruistic course of action might make our executive a candidate
for canonization, but it would not go down well in the psychiatric community,
which has a thing about self-destructive behavior.
Bottom line: If you're inside, you get inside information. Sometimes, you
will have to act on it, or not act on it, as the case may be.
Being a member of the Murphy Family, I am always in possession of inside
information on the family. Sometimes I act on it.
The Usual Hooey
Upon examination, things always fall apart; the center cannot hold.
The 2.0% rise Tuesday in the value of the Nikkei-225 stock index was
attributed largely to the inspiration of the gains in U.S. stocks Monday.
The gains in U.S. stocks Monday (and Friday) were attributed to
bargain-hunting inspired by the losses in four-fifths of last week's sessions.
There is, of course, no logic in the statement, "Because stocks are perceived
as cheap in the U.S., they must perforce be perceived as cheap in Japan."
This is apart from the fact that, by any historical yardstick, stocks are not
cheap in the U.S.
If I were today to be appointed World Czar of Financial Media, tomorrow I
would ban all stories on why markets did what they did.
And then, the sheer cheek of it all, many of these inanities are perpetrated
by "sources."
"It was simply a case of bargain-hunting," one source said.
Card-Carrying Members
One needn't be a beyond-the-fringe civil libertarian to exclaim, "No way am I
carrying a national identity card!"
Of course, in response to the events of Sept. 11, the U.S. appears to be
moving ineluctably in that direction. Or better, the argument that the U.S. is
moving ineluctably in that direction is now respectable. It won't draw hoots.
Upgrade International (UPGD) produces the Ultracard at its - Ta Dah! -
UltraCard, Inc. unit.
This thin, rectangular baby, which the company calls a "technology
platform," purportedly contains 20 megabytes of hard-disk storage within an
exterior as unprepossessing as an ATM card.
I could put my entire life in 20 megabytes, including the note from the nun
who taught me third grade, "Jimmy is extremely disruptive in class."
The capacity of the Ultracard will be put to good use. As Upgrade noted in a
press release:
"Over the last six months, the global demand for high capacity, high
security, and portable data storage has increased dramatically. Many
organizations ... are searching for solutions that will enable them to
conveniently store multiple levels of secure data in a credit card-sized
format.
"They are looking for technology that will also allow them to incorporate a
variety of biometrics and other identification options, including complete
fingerprints, iris scans, voice prints, photographs, digital signatures, and
encryption keys."
"No way am I carrying that!"
Yeah, unless you want to fly, hold a job in federal or state government, or
at a company that receives federal or state contracts ... You see how it could
go on and on. How you could be worn down. How your well-reasoned philosophical
objections could prove too impractical to hold.
(Jim Murphy can be reached at (201) 938-2145 or Jim.Murphy@DowJones.Com)
(END) DOW JONES NEWS 02-12-02
07:30 AM |
