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[fizmath]

1) Invest in the same portfolio as Congressmen.  They usually do about 10 to 15% better than average market returns.  Those percentages are for profit so if your investment increase 8% then theirs will increase about 9%.  I  first read this in Harper's Index a few years back.  Here is another source:

http://www.huffingtonpost.com/2011/05/24/members-of-congress-get-a_n_866387.html

2) Invest in companies that spend inordinate amounts of money lobbying Congress.
One company came up with a lobbying index but it looks to be proprietary and is not publicly available.  You might be able to figure out on your own from available information who some of the companies are.

http://www.economist.com/node/21531014

[prytania3]

Woh. Insider trading, anyone?

[fizmath]

Woh. Insider trading, anyone?

Don't you have to be an executive with inside knowledge to be found guilty of that?

[prytania3]

Woh. Insider trading, anyone?

Don't you have to be an executive with inside knowledge to be found guilty of that?

Absolutely not. Anyone can be guilty of insider trading. Remember Martha Stewart and Imclone? Now technically, she didn't go up the river for insider trading, but she could have. Anyone who has inside knowledge of an event that will most certainly make a stock go up or down and trades on that knowledge is guilty of insider trading.

Congress is passing laws that affect stock prices. They need to be investigated.

[prytania3]

I didn't explain insider trading very well. Anytime you have information that has not been released to the public, which will make a stock move substantially, and you trade on that information, it's insider trading.

[fizmath]

I partially posted this in jest to point out how people routinely take advantage of inside information (Congressmen) or buy influence (lobbyists).  However, if the average investor takes advantage of this information I don't think it would be considered insider trading.  If you could obtain publicly available information on lobbying expenses then you could invest appropriately in those corporations which spend inordinate sums of money to get their way in Congress.

Thoughts?

[prytania3]

I partially posted this in jest to point out how people routinely take advantage of inside information (Congressmen) or buy influence (lobbyists).  However, if the average investor takes advantage of this information I don't think it would be considered insider trading.  If you could obtain publicly available information on lobbying expenses then you could invest appropriately in those corporations which spend inordinate sums of money to get their way in Congress.

Thoughts?

Anything that's made public is not insider info.

[quantmeister]

I didn't explain insider trading very well. Anytime you have information that has not been released to the public, which will make a stock move substantially, and you trade on that information, it's insider trading.

Sorry, wrong. If you're sitting in a restaurant next to two CEOs, and you hear one telling the other that earnings will be substantially higher (or lower) than expected, you are completely free to trade on that information. Insider trading involves a breach of trust. While a breach of trust can be transferred -- i.e., an insider arranges with an outsider to act on the inside information -- a breach of trust must be inferred for insider trading to become illegal.

[prytania3]

I didn't explain insider trading very well. Anytime you have information that has not been released to the public, which will make a stock move substantially, and you trade on that information, it's insider trading.

Sorry, wrong. If you're sitting in a restaurant next to two CEOs, and you hear one telling the other that earnings will be substantially higher (or lower) than expected, you are completely free to trade on that information. Insider trading involves a breach of trust. While a breach of trust can be transferred -- i.e., an insider arranges with an outsider to act on the inside information -- a breach of trust must be inferred for insider trading to become illegal.

The SEC adopted new Rules 10b5-1 and 10b5-2 to resolve two insider trading issues where the courts have disagreed. Rule 10b5-1 provides that a person trades on the basis of material nonpublic information if a trader is "aware" of the material nonpublic information when making the purchase or sale. The rule also sets forth several affirmative defenses or exceptions to liability. The rule permits persons to trade in certain specified circumstances where it is clear that the information they are aware of is not a factor in the decision to trade, such as pursuant to a pre-existing plan, contract, or instruction that was made in good faith.

Rule 10b5-2 clarifies how the misappropriation theory applies to certain non-business relationships. This rule provides that a person receiving confidential information under circumstances specified in the rule would owe a duty of trust or confidence and thus could be liable under the misappropriation

http://www.sec.gov/answers/insider.htm

[quantmeister]

Those rules, particularly the second one, merely clarify (or attempt to clarify) who has a duty of trust or confidence. You are correct in pointing out that you do not have to be a corporate bigwig to violate insider trading laws. But it is incorrect to suggest that it is always a violation of these laws to trade on information that has not yet been publicly disclosed.

[prytania3]

I know. I was just f***ing with you.