ScratchMonkey wrote:

> > she sold the stock and someone from whom that important
> > information had been withheld lost money. She sold something in what
> > is supposed to be an honest market place, knowing full well that it
> > was worth much less.
>
> Value is subjective. The people buying the stock would have done so no
> matter who sold it. In fact, in a brokerage-based system, the stock is all
> dumped into a big hopper anyway, so those buying the stock were mostly
> getting it from other ignorant people.

The value of some things is partially based on subjective qualities. Only the
stocks that are available for sale are dumped into your hopper. In Martha's
case, a considerable amount of stock got dumped because she had obtained inside
information about something that was going to make the value of that stock take
a dive.


> Consider a market where insider trading is allowed. One could tell one's
> broker, "buy the stock unless an insider is selling". With such a brokerage
> feature in place, Martha would have made squat, and there'd be no "need"
> for the pointless insider trading law. If your broker lacks an insider
> watch feature, complain.

There is a difference between having inside information and being involved in
inside training. People in the business of trading stocks should obviously be
aware of information about companies that make them good or bad investments.
There is no problem with that so long as everybody has equal access to the
information.

I would be cautious about buy and selling stocks on the basis on what the
insiders are doing. Some of them are quite good at dumping large quantities of
stocks and taking a small short term loss in order to cause a selling panic
that drives the price down even further, and then they buy back a while lot
more of the same stock at rock bottom prices. As they start buying it back the
prices climbs.