Active Managers and Retail Investors Hurt By Insider Trading
Another good WSJ article documenting the insider trading problem and how it hurts active management. There is a lot of good research on this topic that I covered in my book Central Markets. Essentially, insider trading rewards those who "cheat" to front run the market on imminent news and punishes those following the law and only trade on public information. No law enforcement means cheaters always win.
This is one major reason active managers in bonds and equities repeatedly underperform their benchmarks.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.
© 2022 Lloyds Intrepid LLC