Ricks Picks

In the Trading World, ‘Insiders’ Are Legion

EST

Although we wish Federal prosecutors well in their efforts to root out insider trading, we won’t be too terribly surprised if the five alleged insiders charged Thursday in a high-profile case beat the rap. It’s like trying to root out corruption in places like Kazakhstan or Louisiana, where graft is a way of life. A jury of one’s peers in Baton Rouge probably thinks it’s got better things to do than convict someone for anything less than a capital crime. The five men charged yesterday are all connected to a Mountain View, CA, firm called Primary Global Research. The company advertises itself as an “expert network” firm, which is another way of saying they’ve got some well-placed eyes and ears in the corporate world. For a fee – often, apparently, a large one – the firm would patch clients into a teleconference or bring them face-to-face with someone who would not merely be guessing when he quoted current sales figures for, say, AAPL or Dell.  We lived in Mountain View ourselves for four years and never even heard of the company.  Ahh, if only we’d known!

Perhaps aggrieved shareholders and those who traded on insider information should settle their differences the old-fashioned way?

We’ve always wondered how the regulators choose their targets. There is so much “good information” out there, and so many ways to come by it, that ten-thousand prosecutors working for a thousand years would not exhaust the supply of potential felons. In the meantime, the real insiders have at times seemed to have gotten away with murder by operating in the open. Bear Stearns, for instance.  The late, great investment firm served for a while as investment banker to Resorts International, the first company to open a casino in Atlantic City.  At the time, we were working in the options pits of the Pacific Stock Exchange, making markets in put and call options on, among other stocks, Resorts International. To say that Bear Stearns traded Resorts options knowledgeably would be a gross understatement. They were bloody geniuses, they were, and they leveraged information on Resorts by buying or selling options with uncanny timing. They went a step too far one Friday afternoon, though, when they effected a large trade one minute before the final bell. Our reaction was not to call a prosecutor, but to let Barron’s in on the story. Bears’ shenanigans were duly reported in “The Striking Price” column the next day, and Bear retaliated by taking it “out in the alley,” so to speak. Their lead broker on the Pacific Exchange was a 350-pound behemoth, and whenever we passed him in the crowded aisles of the exchange floor, we were wary of the stake-sharpened pencil he wielded like a weapon.

Perhaps Primary Global’s insiders should have to get in the ring with whoever the aggrieved investors are in this case. That’s assuming federal investigators can find any.

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Comments on this entry are closed.

coolsaint December 18, 2010, 2:49 am

I’m from La so I won’t deny that this state is corrupt , however if you think other states (SC( makes La look like a paradigm of virtue ) ,NC and many others ,(I’ve lived there)) are any different you are naive or just not very smart

JohnJay December 18, 2010, 12:13 am

Speaking of big players.
I read that Exxon Mobil spent $4 million in the third quarter to lobby the Federal government on offshore drilling laws etc.
Down 43% $7 million spent in the yaer ago period.
Jesus, no wonder Boxer and Feinstein haven’t returned my phone calls!
My only shock is that it is public information, and there is not a Federal Reserve type blackout on this news.
Oh well, with an approval rating of 13% all the proles seem to know that we have no representation in Congress anyway.

Steve December 17, 2010, 9:05 pm

I like the picture posted Rick. I see two bullies in prison getting ready to bare nuckle the discussion in regard to which accounting system is the most illegal; private corporate or federal democracy. The Blue Blood pay little fines, get even bigger December bonus, and the inferior caste pay tribute in sweat and blood to the Blue within foreign lands.

How you treat your brother in Cuba, expresses how you will be treated here. The only difference is the need and time. When the time comes you and you, you will be held without bail, without knowing your crime, without ever seeing an accuser; that is if the hellfire does not kill you first extra-judicially in war crime. For surely what the democracy does in your name, [u.s. citizen], will be heaped upon your head, the head of your children, and your children’s children. You sit in silence while the Laws of Nature have been abused, and surely you will sit in silence in your time with no one to hear your plea.

Rich December 17, 2010, 8:37 pm

Speaking of TPTB insiders, one of the reasons started Big4 was to keep an eye on what they are doing with their money and follow the primary trend at the same time.
Demo portfolio of 10 Big4 ideas a week up +1748% YTD. Price increase on 1/1/11 to $10,000/year with money back guarantee if ideas do not cover cost .
Mention Rick’s name, cost until then is $4000 and Rick receives referral fee.
Rick one of the best ST traders, clear, honest and productive…

mikeck December 17, 2010, 8:57 pm

Rich,

What type of investments/speculations are included and how big of a portfolio does one need to “play” that game? Is it one of those, if you have to ask, don’t bother deals?

Mike

Rich December 17, 2010, 9:50 pm

Hi Mike
No, it is one of those golden rule deals;
The guarantee is based on a $10,000 portfolio.
In other words, if the Big4 portfolio does not double in a year, the subscription is free.
The portfolio included stocks and inverse ETFs based on 75 different asset classes, with high turnover this year due to leveraged ETF Trailing Stop Disciplines.
So far there were no refund requests and new subscribers by word of mouth.
The subscription includes a free hour of email consultation on how to fine tune the portfolio, with additional hours by retainer.
Retired after 50 years with Stanford Capital and Merrill Lynch, no longer licensed and found subscriptions a good use of time and money for family and friends. Click on bold orange name to see website.
Regards*Rich

mikeck December 17, 2010, 7:52 pm

Hey guys, thanks for all the examples of criminally by the ruling class. I wonder if Mad Max is sleeping with one eye open these days due to his crash JPM campaign.

Here is another example of the criminals in action, Liberty Dollar…how dare Bernard von NotHaus and the merry band of liberty lovers think they had a right to contract with others and decide what method of payment was agreeable to both parties. Taking on the Federal Reserve was a something that needed to be done and something I’m sure to get involved in again if I manage to live long enough.

If Ron MacDonald’s solution ever gets off the ground, I’ll probably be involved…it has to be better than what we have now. Ron’s book, They Own it All, Including You, seems like a worthwhile read now that I’ve heard him interviewed a couple of times…one is here: http://www.republicmagazine.com/webinar/ron-macdonald-they-own-it-all-including-you-total-slavery-the-fed.html His solution is offered in response to a question rather late in the interview if I remember correctly.

Mike

Buster December 17, 2010, 5:27 pm

Obviously the crooks under investigation just to fool the sheeple into believing their interests are being looked after, should have climbed a bit higher up the rotton tree…

http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405?page=1

Here’s the picture from the UK, much the same as in the US I suspect:
The Banksters were given hundreds of billions in funny money under the guise that it was necessary to get credit flowing to the sheeple to keep the economy from falling further into the abyss. The Banksters imediately start using the money to get effectively free interest return on the markets and buy up comodities leading to higher profits for the banks. All this helped push Bankster bonuses to £7 billion in the city of London this year.
Next they go on a futher spending spree buying up luxury items like there was no tomorrow, to the amazement of the reporters who can’t understand where all the money is coming from??!! Duh!!
This has inevitably now led to the headline inflation rate rising more than is acceptable and now interest rates are set to rise, further hitting the sheeple with higher debt payments, and still no sign of much of the bail out money reaching the them.

You really couldn’t make this stuff up!!
If people weren’t actually losing their businesses, homes, families and lives it’s almost comical how they’re screwing us all!

mario cavolo December 17, 2010, 7:08 pm

Pervertedly refreshing to be reminded by you Buster that such shenanigans are going on across the Atlantic pond…good grief…while certainly on this side of the Pacific pond the China/Asia cronies have their own way of foisting similar…Cheers, Mario

Rich December 17, 2010, 5:00 pm

The only sure tip a broker ever gives, a margin call, effective after today’s close, in NatGas Swaps, Precious Metals, all Treasuries, even Fed Funds!

http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv10-507.pdf

Robert December 17, 2010, 5:48 pm

3rd margin increase in Silver in 2 months, coming after years of zero margin increases…

and yet still the Silver price holds.

This has the makings of an epic back-fire against the CME, the CRIMEX and the big silver shorts.

I don’t think there is enough leverage on the long side in the Silver market for these margin calls to have any significant effect- in fact, I think the rising maintenance costs could simply inspire more longs to stand for delivery, and take their physical metel elsewhere for safe keeping…

I’m calling my coin dealer.

Rich December 17, 2010, 4:29 pm

Rick, your honest personal account is remindful of the new Karate Kid in China.
As someone who lived at the Shadows in Mountain View a few years, friends on the CBo and P Coast, certainly observed ethical shenanigans perpetrated on the exchanges and elsewhere.
Recall a P Coast officer who required plastic surgery after counting cards successfully in Vegas. Another big friend who made several hundred thousand dollars doing that was taken into the back room and threatened with a one-way ride to the desert before banned in the Black Book and using disguises.
A brilliant client who traded his company’s stock successfully without inside info lost his job and house when the P Coast market maker who lost money had him fired and he began to follow a prominent market guru in 1987 to recoup and he lost it all.
How that translates to the markets today might be summarized as “It’s hard to get a profitable trading edge against insiders in a zero sum game.” They have more lawyers, money or swagger.
Yet hope springs eternal and you make money deciphering the trend and using stops religiously.
Right now the trend seems higher for many stocks because so many doubt it, there is another Hindenburg and yesterday just before noon the ISE Call buyers outnumbered Put buyers 577 to 100.
A lot is riding on POMO and the Greenback Effect.
Appropriately, one of our favourites is CBOE above 19.54…

redwilldanaher December 17, 2010, 4:47 pm

Thanks for mentioning those episodes Rich. It’s not a game to TPTB. It’s business Sonny. Zerohedge was taken down last night. I’ve seen other “alternative” news sites get bumped offline from time to time too. If you hit the cartel, they’ll hit back.

“It isn’t yours to win”

Rich December 17, 2010, 6:31 pm

Thx rwd.
Possible someone forgot to renew the ZH domain name and sold to highest bidder.
IRS took a sudden inordinate interest after telling the financial truth on JubileeProsperity extolling 28 basis point APTTAX to replace the politicized 1913 IRS and replacing the private 1913 Fed with Milton Friedman’s public steady money supply computer instead of currently contracting annual monetary base change.
Hundreds of hours of documentation later, hopefully all is resolved and free speech rules.
Telling that Martin Armstrong rots in jail without proper medical care and Private Manning in solitary since May without habeas corpus or trial.
The rich are different – they have more money.
Hopefully they have more ethics too or they may illustrate shirtsleeves to shirtsleeves in three generations or broken hearts…

Cam Fitzgerald December 18, 2010, 9:14 am

I was thinking exactly the same thing Red.

Zero Hedge hit “the truth” nerve somewhere and so down they went. I tried inumerable times to sign in, just assuming it was a problem with my own machine all night…..and now I know otherwise.

dan December 17, 2010, 3:26 pm

the old fashioned way…tar and feathers by the maddened crowd will be in the cards as the CFTC does what they have always done….nuttin

Benjamin December 17, 2010, 12:48 pm

I don’t know about all this insider trading, but when it comes to discovering/prosecuting them, I know it’s impossible because there’s ultimately no regulation in money thus no regulation in accounting thus… Yall get the idea. It’s like trying to pursue a stolen helicopter with a car (during a traffic jam).

So anway, even though it’s not reality just yet, I propose a toast… to beautifully simple soultions!

redwilldanaher December 17, 2010, 4:15 am

Nice touch on the selective prosecution reference Rick. It’s one of the best markers that all the world’s a stage for our regulator friends, their handlers, and friends of friends and friends of handlers. The libertarian streak in me wants to see the evil facade of regulation and oversight torn down so that the public is more wary of wading into the shark tanks. The would-be realist in me knows that the regulation facade is a crucial factor that must be maintained so that the shearing can continue uninterrupted and thus the boyz will see that it’s in place at all costs. The trouble I’m having at the moment is deciding which is more comical/pathetic: Ratings Agencies or the prosecution of punks combined with the paying of minimal fines by JPM/GS et al. after banking hundreds of billions “legally”, as in, legalized/ignored fraud/theft.

Bay of Pigs December 17, 2010, 4:55 am

Agreed Red, Watching Bart Chilton of the CFTC today was really something else. He was asked how things would work out for commodities long term and he said “Hey, I’m just a regulator from DC, it’s not my job to know that”. He is the ONLY person trying to fix this perverted, broken and fraud ridden system (especially in SILVER). He gets it. Does everyone here get it now or are we still drinking MSM Kool Aid?

redwilldanaher December 17, 2010, 5:33 am

Hi Bay, your closing question is a good one. I can’t discern whether or not some in this forum just enjoy eliciting a response or are acting out, knee-jerk style, as they’ve unwittingly been trained to by the MSM. I can understand that type of natural reaction because 25 years ago I would have likely experienced it myself.



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