Hello All!
This is a little bit off of the survey topic, but I was pondering my navel and I came up with an idea.
Market fluctuations are impacted by many factors. One of the more critical factors is supply/demand ratios. Especially in commodities and many durable goods. Now, another factor is financial and idustry analysts. Theoretically, these skilled professionals take the results of many factors and synthesize a condensed summary of where the industry stands and projected outlooks, risk factors, etc. And investors then speculate on these results (in addition to many other things).
So here's my question, to some extent, people bet on what the analysts are going to say (just like speculation on Fed Res Board Rates). The "closer" that people are to the source of information, the sooner they can act on the results and the more likely they can profit on those actions. Here's an exaggerated example. A guy in a plant knows they are going to sign a big contract for some raw material. He tells his broker, hey, buy some shares of this raw material. The "public" wont find out about the contract until it is signed or "leaked". The guy is "closer" to the info, and therefore stands to profit more than the "public". I don't believe this is considered "insider trading".
Computers narrow the gap and force these time-delayed information "advantages" to become smaller. Eventually, theoretically, the time lag will be "zero". Meaning that as soon as information is produced it is accessible everywhere by everyone. If a major portion of the stock markets are speculative, what sort of impact would this have? Just a navel pondering thought question.
Regards to all!
This is a little bit off of the survey topic, but I was pondering my navel and I came up with an idea.
Market fluctuations are impacted by many factors. One of the more critical factors is supply/demand ratios. Especially in commodities and many durable goods. Now, another factor is financial and idustry analysts. Theoretically, these skilled professionals take the results of many factors and synthesize a condensed summary of where the industry stands and projected outlooks, risk factors, etc. And investors then speculate on these results (in addition to many other things).
So here's my question, to some extent, people bet on what the analysts are going to say (just like speculation on Fed Res Board Rates). The "closer" that people are to the source of information, the sooner they can act on the results and the more likely they can profit on those actions. Here's an exaggerated example. A guy in a plant knows they are going to sign a big contract for some raw material. He tells his broker, hey, buy some shares of this raw material. The "public" wont find out about the contract until it is signed or "leaked". The guy is "closer" to the info, and therefore stands to profit more than the "public". I don't believe this is considered "insider trading".
Computers narrow the gap and force these time-delayed information "advantages" to become smaller. Eventually, theoretically, the time lag will be "zero". Meaning that as soon as information is produced it is accessible everywhere by everyone. If a major portion of the stock markets are speculative, what sort of impact would this have? Just a navel pondering thought question.
Regards to all!
