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Investment Intelligence From Insider Trading

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Investment Intelligence From Insider Trading

MIT Press,

15 min read
10 take-aways
Text available

What's inside?

Insider trading isn’t necessarily shady, tricky and costly. In fact, it is often legal, straightforward and lucrative.

Editorial Rating

7

Qualities

  • Innovative

Recommendation

Are you ready to learn from the somewhat mythical, sometimes notorious and often misunderstood inside traders? H. Nejat Seyhun has compressed a gargantuan amount of information - 21 year’s worth of reported insider trades, more than one million transactions - into a manual that debunks and reconfigures the wild world of insider trading. Since inside traders are bound by strict laws, their prowess comes from proximity to the action. As a farmer can predict the next big storm by watching his cattle, sophisticated traders can predict the next market windfall by watching the insiders. This isn’t a late-night page-turner; after all, Seyhun is a noted academic expert. Yet flashier verbal energy might have sacrificed the book’s most valuable quality: precision. This book (the opposite of the Investing for Illiterates-type) takes its readers and itself seriously - If you are serious about your portfolio, getAbstract recommends that you put yourself through Seyhun’s course. Dedicated investors, policy makers and scholars need this on their reference shelves.

Summary

Eliminate Your Misconceptions

Chains of negative connotation bind the term "insider trader." People who misunderstand the term - the people who buy into the negative connotation - are missing out on a tremendous investment opportunity.

What springs to mind when you read the words "insider trading?" If you’re like most people, you immediately think "insider trading is illegal." Don’t be like most people. Be precise. Insider trading is sometimes, but not always, illegal. Insiders trade legally and profitably all the time. As long as they don’t use material, nonpublic information they’re in the clear. Most large firms are exceedingly clear on what, when and how their members can trade. Now, eliminate another misconception. The common assumption is that insider traders don’t report their successful investments, because these investments are illegal. People reason, therefore, that insiders only release their throwaway investments; in other words, they only release the investments that didn’t earn any money. Wrong. The insiders’ reported legal transactions contain valuable information.

Why You Should Pay Attention

Insiders cannot move a single transaction without...

About the Author

H. Nejat Seyhun holds the Jerome B. and Eilene M. York professorship at the University of Michigan Business School, where he is chairman of the finance department. He is one of the leading academic experts on insider trading.

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