Thursday, March 10, 2011

Move Over Martha, Here Comes The Raj

"The stock market is not fair" is the Number One tenet of Tyler Bollhorn, originator of the StockScores technical stock trading system, and these days truer words have never been spoken.  What Tyler was referring to primarily is the "inside information" that inevitably becomes known to secretaries, family and friends of corporate officers and employees, as well as analysts who spend every waking moment studying company reports, querying the staff, and then picking through the company's trash for tidbits.  (There are lots of other quirks that make the stock market unfair these days, eg. flash trading, high-speed trading, etc. but that's a topic for another day.)  In point of fact, there are so many things that make the stock market unfair (and unstable - witness the Flash Crash of May 6, 2010, for which an adequate explanation has still not been found) that many small investors eschew the big three New York exchanges altogether.  (Ironically, precisely because of the problems there the Big Three may yet be safer than the wild west attitude on lesser-known bourses.  And all of this "unfairness", of course, makes the StockScores systematic approach even more relevant than ever.)  Part of the SEC crackdown after it got caught with its pants down re: the Madoff scandal is a new emphasis on insider trading.  Enter Raj Rajaratnam, Galleon hedge fund guru, Tamil, and the 236th wealthiest American, in chains.  Guilty until proven innocent of course, apparently the SEC has truckloads of solid evidence including wiretaps - which will be up against even more truckloads of The Raj's billion$.  The stakes are incredibly high here.  If the government loses what it sees as an airtight case, investors will view the SEC as impotent and Wall Street as impervious to the law.  If Raj loses, Wall Street will once again be viewed as a bunch of cheats that need stricter regulation to protect investors.  My prediction: this is going to be a lavish seven-course spicy curry banquet that will make Martha Stewart's insider trading transgression look like a peanut butter sandwich.  Hmm...all of a sudden I'm hungry.