Do you remember Ivan Boesky? He made more than $200 million investing in stocks in the mid 1980s. He had an amazing ability to buy into a company just a few days before a big merger was announced. His profits were enormous. It turns out his prophetic abilities weren’t tied to good analysis. They were tied to insider trading tips.
Boesky was “Friends” with some of the biggest dealmakers of the day. They tipped him off to deals about to take place. Boesky made millions trading on legal highs forum Insider Information.
I think everyone knows the term “Insider Information.”
It’s when an investor has information no one else knows. They then try to profit from the information by trading stocks or bonds. The key here is the information. It’s from the inside . . . the normal investing public would never stumble across it.
Think of the lawyer drafting up a lawsuit against a big corporation. Or an accountant who knows his company just signed a huge new customer. Or, an Investment Banker advising a CEO on taking over another company.
Believe me, I know all about insider information.
I spent more than a decade working in Investment Banking. I was exposed to insider information every day. I guess I could have made billions with the knowledge I had . . . But I didn’t want to go to prison.
As an investment banker I’d have detailed discussions with CEOs. We’d draft up ideas for Merger & Acquisitions. We put together deals where the target would be bought out for huge premiums. I had access to CFOs. Many of which told me financial results weeks before the general public would get the information.
It would have been easy to buy a few shares here and there and make tons of money.
But I knew better. The securities industry is highly regulated. My accounts and activities were monitored. Every trade I made was reviewed. (It’s a little like being under a tax audit every day of your life.)