Time machines, asking your grandmother and insider trading.
I’ve written in earlier posts about the gains you would make if you travelled back in time and asked your great great grandmother to invest for you in 1900. In the more recent era, you could ask your grandmother, your parents, or your younger self to invest for you. Armed with hindsight, you might pick Apple and Amazon, Microsoft and Google, Facebook etc. Forewarned, you would avoid all those failed companies whose names we have long since forgotten.
But here the law of unintended consequence might kick in. Your stellar investing record might come to the attention of the authorities. How is it possible that you have picked only winners and the gold medal winners in the stock market race at that? But the authorities could not possibly prosecute you. The law has not been framed around the possibility of time travel. Yet! The SEC are ruthless, aggressive and punctilious, quite rightly, but even they haven’t added that breach to their arsenal yet.
It just goes to highlight something I have long known. It is less the case now than it was when I first set foot in a corporate finance department of a large US investment bank several decades ago. Back then, those who conceptually broke the law morally /ethically were often not breaking it in fact because the law hadn’t yet been couched to encompass the imagination of the transgressor. Note to all the lawmakers out there: just ask a financial thriller writer what people might be getting up to before you frame updates to financial services laws… I hasten to add that I was not breaking the law either in fact or ethically but I did dream up some humdinging financial crimes.
If you fancy some summer reading about financial shenanigans rich in adventure, derring do and double-dealing, then look no further than my back list, starting with the global bestseller, Nest of Vipers.