From the WSJ this morning: Tip on Policy Shift Jolted Health Shares
“The resulting stock surge is one of the most dramatic examples in recent years of how tips and insights from Washington’s burgeoning political-intelligence business can drive trading on Wall Street, potentially leading to big profits for those in the know.”
It’s a fascinating article on the value and legality of stock-moving political intelligence.
How much was that worth? For Humana alone, the stock price price bump resulted in a market cap increase of $1.5 billion. The effect on that stock was worth as much as Yelp (the entire company). The total impact on Humana, UnitedHealth Group, and Aetna? A staggering $7 billion increase in market cap in one day, or the value of TripAdvisor (market cap: $7 billion). Those controlling that decision controlled more value than the CEO of TripAdvisor. Now, for a moment, please honestly answer what controls are in place to ensure that legislators wielding such an enormous influence would prefer the interests of the citizenry of their own? Elections? Regulation?
Somehow the sobriety imposed by periodic elections every 2 or 6 years does not seem to outweigh the enormous incentives for personal gain that legislators face (or rather, that they campaigned hard to win).
What about regulators? They would be tasked with regulating their bosses and value monetizers (No, I don’t think monetizers is a word, but stay with me now…). Also from the article:
“Regulators have never brought an insider-trading case against a political-intelligence firm, member of Congress or congressional aide.”
They control your value, and you don’t have a prayer of controlling them.
Have a nice day.
P.S. Just kidding! You do have a prayer. We’ll talk about that later though. [UPDATE:] See here.