Insider Trading Arrests Prove Markets Are Inefficient

Vanguard became the largest mutual fund family in the United States earlier this year. Vanguard’s premise is that its investors wouldn’t be disadvantaged because they  would be getting market returns. Achieving market returns give index fund investors a false sense of security. Unfortunately, they’re losers too but they can’t see it.

Insider Monkey, your source for free insider trading data, isn’t surprised that some hedge funds received inside information. We aren’t surprised people profited from insider trading. This has happened every day since the first day the New York Stock Exchange was founded. Insiders will always have some inside information and some of them will find a way to exploit that information. Academic studies have shown that “legal” insider purchases manage to beat the stock market. When several insiders purchase around the same time, the excess return is more than 7% per year above the market index. These aren’t trivial numbers, and the trend is seen all around the world. Insider trading is very profitable in Germany, Italy, the Netherlands and in several other countries.

Don Chu, Walter Shimoon, Manosha Karunatilaka, Mark Longoria, and James Fleishman weren’t the only people allegedly exploiting inside information. They’re just among the ones who got caught. Markets aren’t efficient. There are people out there who manage to beat the index funds, and it isn’t just a coincidence. Insider Monkey believes anyone can imitate insiders and beat the index funds. Academic studies support this belief. Learn how to legally profit from illegal insider trading.