Not-so-Chinese Whispers

So the stock is rising for "no apparent reason". "It's noise", says the naive reversion trader or overconfident short-seller. Maybe someone knows something. Knows something indeed!!! Bloomberg reported today that a NY-based investment banker within the energy group at Credit Suisse (and friends) were taking advantage of precisely such Fat Chance to profit handsomely from their privileged information. Soon, however, he'll be surfing porn at the US Federal minimum security prison at Allenwood.

The list of deals that he and his friends are accused of capitalising upon is long, and the profits large indeed. He told friends and business partners, they told others, trades were placed, leaving a trail of landline and cell-phone records. But what was he thinking? After the effort that the SEC put into trying to get Martha Stewart make the pen more "homey", did he believe they were now too preoccupied with terrorism? Really! Consider the effort that Ashcroft put into screwing harmless pot-head Tommy Chong.

As result, Credit Suisse now has egg on their face for hiring and promoting such an idiot who got caught badly, without any form plausible deniability. And make no mistake: the real surprise here is how stupid he was for someone 37 years old and in the business for a long time, and that he got caught. OK, so he was not a WASP American, but still, "what was he thinking?!?!?" For everyday. CFOs, analysts, hedge-fund & portfolio managers, non-executive directors, syndicate desks, financial printers, lawyers, legal assistants, journalists, TV talking heads, SEC registration clerks, cleaners, and all their friends, relations, acquaintances and people they want to impress are acting mmaterial non-public information within the public markets, whether about secondary offerings, earnings torpedoes, takeovers, buybacks, mergers etc.

So that emerging price move, with emerging volume change, sans information might just be noise. But the odds are that someone has information that YOU don't and is acting upon it, either directly or indirectly in the market.