Anything to make a buck...
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Anything to make a buck...
This is one of those sad ideas that make a lot of sense, but are simultaneously too simple and too complicated for the average person to attempt to accept.
I'll try to oversimplify it. Anyways, there's something called Strong Market Efficiency that says that the price of a stock in a market reflects absolutely all information about that particular stock. The moment something happens to a company - a failure to get a patent, a facility explodes, some bug reveals itself - the positive or negative effects of that "something" immediately change that company's price. The market immediately prices out ALL information about a company - there is no "insider" information, you can never beat the market. The price of a stock is exactly what it's worth at any given time. These guys named Eugene Fama and something French wrote about the topic.
Anyways, say there was a market that priced the viability of certain days for terrorist attacks. A terrorist starts planning something, and that information peters out into the market, and ends up touching peple who invest in this "terror market". We see an uptick in a particular day and we know something is coming.
I know this all sounds terribly outlandish, but there's some really, really good research that proves that a lot of this stuff works. There was some good research on how the stock market reacted in advance of 9/11, for instance.
Even if you don't believe in Strong Market Efficiency, (and many don't), there's something called semi-strong market efficiency, that says that the market prices all publicly available information. Far more people trust Semi-Strong Market Efficiency, and simply having a tool that registers all public information would be amazingly useful, and be a huge boon to our defenses. Look up "random walk", or "strong market efficiency", or Fama, or any finance columnist that likes to take potshots at the money management industry.
Riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight. :wtf:
"Holders of a futures contract that came true would collect the proceeds of traders who put money into the market but predicted wrong. "
That sounds like Butch betting on himself to win the fight in Pulp Fiction. Wouldn't take a Donald Trump to make some serious loot in a market like that. Fuck man, Lee Harvey Oswald could've assassinated JFK and recieved enough bread to be above prosecution, all in one day if we'd only been sharp enough to dream up such a well researched market back in the early sixties.
But you know what I like best? John Poindexter. I hope we all realize that that man plead GUILTY in the Iran-Contra hearings and is now head of the office setup to pry into the communications of you and me and generally just spy on us. Any thoughts on that?
Pa
Nice to know I'm such an average person who can't understand why the idea of betting on terrorist acts would help our DoHD.
So Stone, you're saying that according to SME theory, investors would have more knowledge about potential terrorist acts than our own intelligence agencies?
The idea of possible "insider trading" in this Terror Market both frightens and sickens me. If there was money to be made, it would happen sooner or later.
This could be very intelligent, actually.
Imagine... you're SAddam's current right-hand man. Put £100,000 down on him getting captured between, say, 9PM and 12PM on the 15th August and then jack his whereabouts in to the Americans at 9 on the 15th.
Take the loot, set up shop in whereever-the-hell-ever. I bet you anything that's what they're hoping will happen. :confused:
Quote:
Originally Posted by Wolffen
I'm not calling people "average", I'm saying that SME is a difficult concept to grasp (I had a hard time with it) because of how simple it is.
And, yes, according to SME theory, the sum total of the knowledge of all investors in the world (ie the information base that would be effecting terror market prices) would be stronger than "our own intelligence agencies" - in fact, in the first place, it would already encompass the knowledge of our intelligence agencies.
This "terror market" has very little to do with making money. This is what we'd be basing this terror market idea on:
1st. People like to make money.
2nd. People will use as much of their knowledge as possible in order to make money. If there is any way available for someone to use their knowledge to make cash, then that knowledge will eventually end up making cash, for that person or for someone they know.
If a futures market existed that would reward people for knowing when terrorist acts would happen (by allowing them to buy futures for days, before others knew about it), then people with that knowledge would use the market. If those people didn't use the futures-terror-market, then their knowledge would inevitably filter outwards, and would eventually influence someone who did use the futures-terror-market.
Those people, utilizing their knowledge about the terror, would drive prices upwards, if ever so slightly, and that would, in all likelihood, give us an indicator of something happening.
It's not quite about that.Quote:
Originally Posted by red_war_machine
The way it would work, is:
0.) All those terrorists Saddam was funding decide to attack the Embassy in Indonesia on April 19th 2004.
1.) Saddam's right hand man would hear about how they were going to attack the Embassy in Indonesia on April 19th.
2.) He wouldn't use the terror market - however, someone he knows would hear about it - maybe one, maybe two - basically his entire personal network, everyone he knows, would potentially know something, anything, about an attack happening April 19th.
3.) No one in that "personal network" uses the terror market, either. However, every one in that "personal network" then has a chance of conveying an even smaller amount of knowledge about that 4/19 attack to everyone in their own personal network. The web expands.
4.) Repeat.
5.) Repeat.
6.) Repeat.
...
XX.) By now, a massive web of people all have an extremely small chance of knowing something about the 4/19 attack. Some of those people will also know about the terror market, and given their desire to make money, they'll use whatever knowledge they have about the 4/19 attack, and they'll buy 4/19 futures on the cheap. They know something you don't, and they know that the 4/19 futures are worth more than they're priced at right now. They buy 4/19 futures.
XX+1.) As people buy 4/19 futures, the price of 4/19 futures goes up.
We now know that there's an increased potential for risk on 4/19.
This would theoretically happen much faster than you'd think it would - it'd happen virtually instantly according to SME. And, it'd work.
Heh, if you were one of those terrorists, wouldn't you have shorted TWA and Delta on 9/10/2001, or, shit, shorted everything else? Invested hard at defense stocks?Quote:
Originally Posted by PaCrappa
This is how the stock market has always worked - I don't know how the stock market reacted to JFK, but I'm quite sure it plummeted, and any savvy investor would've been able to use knowledge of JFK's assassination to make a lot of money.
The guy who shot Garrison probably had an opportunity to make money, too. This is how the market works, it's effected by the attitudes of every single investor anywhere near it. Anything negative will effect the market.
Good words, Stone. I heard of this yesterday morning on the radio and I thought it was a great idea.
It'd be a very efficient way to let any elected official know what's on people's minds. It would also be better than, say... the Lottery, since people would be using their knowledge (or lack thereof) in trying to predict the future.
You break the theory down extraordinarily well, Stone, but this sentence is the kicker for me. "Those people, utilizing their knowledge about the terror"...maybe this thing would have worked. It just sickens me that an investor, or several investors, would have knowledge, if even an inkling, that a terrorist act was coming and not inform an intelligence agency. I suppose you're implying that the knowledge would be potential subconscious, and that this market would act like an organism; the organism responds to all feedback to generate a response, and these investors would be single cells that could have a small (or possibly large) impact on that response, without knowing it. But the way you describe it, it sounds more overt than that, and that makes my stomach turn.Quote:
Those people, utilizing their knowledge about the terror, would drive prices upwards, if ever so slightly, and that would, in all likelihood, give us an indicator of something happening.
Now, if they were looking at this as a honey pot to attract shell companies of terrorists to track them down (since they would have insider knowledge), I could stomach this a little better, but only a little.
Late 90s tech bubble, nuff said.
Idiots.