Wednesday, August 16, 2006

inside trading on a national level

Well the family is on their way home, they just left Ramat Bet Shemesh where they said good by to our sister in law. We're hoping for a long lasting peace and quiet and I may even fill up the new swimming pool when I get home so they can enjoy it for the last month of summer. Last night we ended our last day as refugees by going to the big Arts and Crafts fair in Jerusalem with my brother, his wife and my sister. A nice time was had by all, though the concert sucked. We experienced what Joe Settler termed "synchronous clapping," though one girl who was trying to get it out of herself for about 20 minutes finally got up walked into the aisle and danced.

A lot of Israelis don't understand what the big fuss is about the chief of staff selling his stocks right before the war. I'm not sure if they just don't understand how the stock market works or they aren't sure exactly what is wrong with this. The way the stock market works is someone can only sell shares if someone else is interested in buying them. That's how the share price is worked out. The higher the interest the more people will pay.
If someone knows something that other people don't know he can buy shares from someone who wouldn't have sold them if he had know that information or sell shares to people who wouldn't have bought them if they had known the information. If you know specific information about a company then it is called insider trading.

But lets say you own shares in a company and you are the head of the army and you know that we are about to shoot rockets at their world headquarters. If you own stock in that company you know the stock price will go down and you will want to sell it. But if you sell it someone who doesn't know it is about to get blown up will buy it because he thinks the company has a good chance of earning a higher profit. Selling shares in that company is therefore harming other people.

An hour before you order troops into Lebanon is the wrong time to sell your shares. It says that you are not the person who should be entrusted with privileged information because you are using that information to make a profit.

I think he should get fined and/or fired.

2 comments:

Joe Settler said...

I kind of feel that dumping your stocks before you lead your country into war is kind of like a quarterback betting against his own team winning.

rockofgalilee said...

Just call him Pete Rose Halutz