Insider trading on sterling was blatant
Its a sad situation when you can predict a news story by watching the market trade insider information, before it is announced.
It is bad enough when the insider trading is in a marginal penny stock under the thrall of manipulators, because lots of hapless stock gamblers are going to lose their shirt.
Its worse when a sizeable company in the grip of a last minute news leak goes mad, because its the pensions of thousands getting raided indirectly.
However, when its a currency it is truly shocking because it is nations being looted.
You do not have to be either a genius or a paranoid to note that the pound slumped in a straight line up to the point of the downgrade announcement.
Perhaps you need to be a little cynical and a little wary to catch such a trend early on and put two and two together.
However the insider trading on the sterling downgrade was just blatant. It even started straight after the Christmas holidays as if it was diarised in, which it most likely was.
Ive been tweeting @clemchambers about the downgrade since January.
For instance 28 January: Britain about to lose AAA rating? Heavy falls in pound are saying something. Remember we get to know last.
I predicted the downgrade purely on the basis that such a move could only be explained by insider trading.
Currencies simply dont fall like that unless its a central bank manipulation, which apparently never happens, or via massive trading on insider information, or of course both.
This kind of top down leakage and consequent insider trading has been pestilential since 2008 and it is simply not acceptable.
Even the biggest crooked hedge fund is just a minnow compared to this level of financial crime and something needs to be done.
Im afraid there is no chance anything will be done, but if top institutions like central banks and rating agencies continue to be central to this kind of skulduggery then heads need to start rolling.
If the costs of the crime of insider trading are unacceptable in the equity market, then the seriousness of this crime at the currency and bond level is ten times greater.
The lesson is, when you see an emphatic market move like the sterling euro trend since January 1, do not fight it.
The news will be out soon. In the US the market moves three to four days ahead of the figures for their economic data, so if the Dow rallies or tanks, you will find out in a few days why.
This means you should never trade the news.
If the news is good the opposite of what you expect in the market will happen; the market will fall as the insiders close their long positions and the outsiders buy into their selling.
Likewise, if the news is bad, the market wont fall for long as the big players will have to close their shorts by buying once the news hits and the outsiders sell on the news.
This will ring lots of bells for people who have never guessed what the game is.
Of course the brave can watch out for the insider action and jump on it — about as risky a strategy as you can get.
Ultimately this is why you should not trade and why you should invest.
It is only in the long run that prices properly reflect true value. In the short term the markets are mired in volatility, narrative and all the nonsense that drives the day to day.
It is only the long term trend that grinds away that matters.
Meanwhile someone at the beloved regulators in the US and Europe needs to be cracking heads.
If they dont, they share this shame with the criminals to whom they turn a blind eye.
Clem Chambers is CEO of leading private investors website ADVFN.com. His latest book, The Death of Wealth: The Economic Fall of the West, is out now.
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