Archive for the ‘Social Trends’ category

Killing the Insider

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Now with SAC Capital Advisors, a multi-billion dollar hedge fund under attack and potentially ready to shut shop, one wonders what is getting destroyed or created in this process? Who should be excited? Who should feel distraught?

Is it destruction? Rajat Gupta’s wiki page labels him as a corporate criminal before talking about his philanthropist activities. Bad is stronger than good (Nov 1, 2012). Corporate criminal evokes a stronger context than philanthropy. Markets are ruthless. Steven A Cohen’s wiki page does not indicate him as a criminal of insider trading yet. George Zimmerman on the other hand has no wiki page and has been acquitted him from second degree murder. On the face of it, it seems that financial crime is worse than a probable homicide. But it’s the society which has decided to punish the industry and its poster boys. And since negative mood does not know balance, the forces tend to exaggerate and will continue to have a “jail the bankers” approach.

What are we creating? Well because markets are alive, the inefficient is pushed aside and efficient take its place till the cycle repeats. Who survives? The underdog, the underperformer, the inactive, the small size, the big size is cut down either by the society (antitrust) or proactively by the entity itself (downsizing). A girl complained at school about a mischief done by the boys. There were many boys. The girl could remember the few who were leading the mischief. Not everyone from the group came to attention and hence escaped the punishment; availability bias. Society always creates opportunities for the underdog even if he is a part of the same industry under attack, a level playing field for David against Goliath.

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Mukul Pal, is a Chartered Market Technician, MBA Finance and a member of the reputed Market Technicians Association (MTA). He has more than a decade of Capital Market experience dealing with derivatives and global assets. He has worked for Bombay Stock  Exchange, multinational Banks and brokerage houses in leading research positions before starting on his own in 2005. He is the President of the MTA Central and Eastern European Chapter.


Social Trends: Future of religion (Harvard)