Friday, June 14, 2013


My favorite policy wonk, Ezra Klein at WaPo posts on the same topic I used for my commentary this week on USFR: How the U of M sells their consumer sentiment survey results early to both the press and traders who scoop up "dumb money".
It’s not just media companies and financial data providers who have to grapple with this. The same applies to the research departments at investment banks, who periodically come under fire for giving their clients access to reports upgrading or downgrading a company’s stock before the information goes out to the rest of the world. As Richard Curtin, the economist who runs the University of Michigan sentiment survey, told the Wall Street Journal in defending the practice of early release put it: “This research is totally funded by private sources for the benefit of scientific analysis, to assess public policy, and to advance business interests. Without a source of revenue, the project would cease to exist and the benefits would disappear.”
Whether you’re a reporter who comes up with a scoop on the Fed, an analyst who has an insightful take on what a big company’s stock is worth, or a university doing a large and expensive survey, somebody has to pay the bills. And this conflict between the needs of investors — that limited, early access — and what is best for the public and markets as a whole, isn’t going away. [Short post worth reading]
The days of timing any market are over. And frankly, I think derivatives (options) are even more subject to HFT and black box trading. Like people managing 401K's, I'll stick to blind averaging or index-type funds.

*EK posted this afternoon. I recorded the show at 8 am.

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