Legalized Gambling!! Henry Blodget: Moral of Insider-Trading Bust: Only Fools Try to Beat the Street

Henry Blodget: Moral of Insider-Trading Bust: Only Fools Try to Beat the Street: "

It's the myth that will never die.

Jim Cramer has made a career out of promoting it, as have countless other stock-picking gurus since the dawn of time.

What is this myth?

If only you 'do your homework,' analyze those financial statements, and listen to such-and-such a stock-picking guru, you, too, can pick stocks well enough to beat the pros.

If there's one thing that should ring out loud and clear from the recent Wall Street insider-trading bust it is that this is preposterous.

Stock trading is a zero-sum game. You cannot make money from trading without other people losing money.* In order to win the stock-picking game, therefore, you have to out-trade other traders. You have to beat the other traders by enough to offset your costs of research and trading (which are deducted from your returns). And you have to do this consistently, year after year after year.

Even without illegal inside information, your competition is intense. The hedge funds, mutual funds, and other professional traders you are competing with have, at a minimum:

* Professional analysts and traders with decades of experience who work 20 hours a day

* Huge industry Rolodexes filled with primary contacts at companies whose stocks they trade

* Research budgets that run into tens or hundreds of millions of dollars a year

* Dozens of Wall Street brokers calling all day with every scrap of info they can dig up

* Instant access to 100% of Wall Street research and analysts from hundreds of firms

* Proprietary research services that can cost hundreds of thousands of dollars a year

* High frequency trading computers that act on any market info in milliseconds

To win the stock-picking game, you have to consistently beat folks who have all of these advantages and more.

And then there's the sort of information that the busted hedge fund, Galleon, is alleged to have traded on. Yes, some of the information is clearly illegal inside information. The rest of it, however, is what is known on Wall Street as an 'edge.'

Most hedge funds would describe most of the information Galleon traded on as 'research.' Many would not trade without it -- because then they would be like all the dumb suckers who don't have an edge.

Information like Galleon's is everywhere on Wall Street. So in addition to every other advantage professionals have over you, there's also that.

On Mad Money tonight (and every night), Jim Cramer will tell you which stocks to buy -- and why. What he won't do is explain how the information he gives you will enable you to out-trade firms like Galleon.

The folks at Galleon watch Jim Cramer, too, of course -- as do the folks at most other Wall Street firms. They watch him out of the corner of their eye while they tee up trades based on much better (and much more narrowly distributed) analysis and information.

Perhaps you are one of the folks who deludes themselves into thinking that with an hour or two a day of 'homework,' you can out-trade Galleon. If so, Galleon is thrilled to have you in the game. As are the hundreds of other firms who make their money whipping suckers like you.

There's a saying in poker: If you don't know who the patsy is at the table, it's you.

Next time you feel like bellying up to the Wall Street poker table, therefore, ask yourself again who the sucker is. Chances are, it's not Galleon.

* Many people don't understand this. They confuse market gains and trading gains. To make money in the stock market, all you have to do is own stocks when they go up. This is NOT a zero-sum game. It's investing.

See also:

Stock Market Fools: 15 Gurus Shamed By The Rally Of The Century

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Andy Ostroy: Why Obama's Nobel Peace Prize Is Deserved

Andy Ostroy: Why Obama's Nobel Peace Prize Is Deserved: "

Republicans apparently have one more thing to hate about President Barack Obama now that he has won the Nobel Peace Prize, beating out 200 other candidates for addressing the threat of global warming; for trying to rid the world of nuclear weapons; and for attempting to achieve a global peace.

In Oslo, Nobel Committee Chairman Thorbjørn Jagland said:

Only very rarely has a person to the same extent as Obama captured the world's attention and given its people hope for a better future. We are not awarding the prize for what may happen in the future, but for what he has done in the previous year. We would hope this will enhance what he is trying to do.

Right-wingers are unsurprisingly outraged, calling Obama's award a travesty, claiming the president hasn't yet 'accomplished' anything that would merit such an honor. As the news broke Friday, conservative pundits were in high-gear robotically regurgitating the primary talking point that Obama won the award simply for not being George W. Bush.

But let's get something straight here: this is a very proud day for America. For all Americans. After eight embarrassing, unrepentant years of reckless cowboy arrogance marred by war, war crimes and human rights abuses, Obama's Nobel Prize symbolizes the beginning of the United States' return to respectability and perhaps even greatness someday. A time when the world is looking to America, and its president, for leadership. This isn't about Bush. It's about Obama and what he represents on the world's stage.

The notion that Obama's prize is undeserved is absurd and an insult to every American. First of all, who said the Nobel Committee's criteria for winning requires candidates to be 'accomplished' U.S. presidents? Or that they even be a U.S. president, for that matter? So the fact that Obama was selected so soon after his inauguration is totally irrelevant. This honor isn't about what he's done since January. To the contrary, it's about how this relatively unknown Midwestern politician with humble beginnings became the first black president of the United States by inspiring a nation through a message of peace, hope, and aspiration -- and thus shifted the political and racial winds in this country and throughout the world. The award is a recognition of Obama's vision for a new, harmonious planet, and how he's serving as a catalyst for that change. To say he's won because he's not Bush is grossly oversimplifying the significance of the prize. Rather, he's undoing the colossal damage that's been done by Bush. Big difference.

It's been eight years since America's been led by such an intelligent, inspirational figure as Obama. A president who thinks before he speaks. One who weighs options before he acts. A president with depth and intellectual curiosity. A president secure enough in his manhood to be able to talk with his enemies, rather than simply talk tough. A peacenik rather than a warmonger. Obama's restored dignity and diplomacy to the most important office in the world, while setting an example for everyone else in the quest for peace on Earth. That's why Obama won the Nobel Peace Prize.

It's unconscionable that on this great day for America, Obama's achievement has to be turned into something ugly and partisan by a bunch of un-patriotic, mean-spirited, sore-losing Republican crybabies who've yet to emotionally get beyond last November -- and probably never will.

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Steven L. Spiegel: Why Obama's Mideast Policy Will Work

Steven L. Spiegel: Why Obama's Mideast Policy Will Work: "

I am sick and tired of hearing about how Obama is 'not good for the Jews,' or, as a friend of mine put it recently, 'everyone who voted for him should be ashamed.' If looking for solutions to Israel's toughest problems -- Iran and the Mideast peace process -- and trying to fix both is somehow bad for Israel, then I'm not sure what is good.

President George W. Bush placed Iran on the 'axis of evil' with North Korea and Iraq, and then settled into an attempt to isolate Iran with tough rhetoric and mild sanctions. While he talked, Iran grew stronger in the region and continued building the potential for a nuclear force. It was the United States that was left without the intimate cooperation of its allies. Is this the policy the critics want President Barack Obama to pursue?

The president has wisely reversed course, pursuing an activist and even aggressive policy to stop the nuclear force by diplomacy if possible and by tough sanctions if necessary. He has worked hard to gain the confidence of allies, and has improved relations with Russia by altering Bush's policy of long-range missiles in Eastern Europe. Moscow is critical for making sanctions more effective. And when Tehran lied about its newly discovered nuclear facility, Obama deftly pounced, announcing the true nature of the Iranian installation and putting the Iranians on the proverbial 'ropes' for the first time in years.

It did not take long for the Iranians to change their tune. At a meeting in Geneva on Oct. 1, the United States for the first time joined the other permanent members of the U.N. Security Council (Russia, China, Britain and France) plus Germany in a long-planned meeting with a high-level Iranian delegation to discuss Iran's nuclear ambitions. The outcome was startling: Iran agreed to expanded inspections of its nuclear facilities, especially the new site. It also accepted the idea of sending most of its declared enriched uranium to Russia and France to be turned into nuclear fuel for a small Iranian reactor that produces medical isotopes. If the Iranian government was actually to make good on these promises, and assuming Iran does not have other undiscovered facilities and additional fuel, this would constitute a major achievement in at least delaying the Iranian development of nuclear weapons.

The president took no chances. He did not announce a major breakthrough, but instead called the talks 'constructive' and warned Iran yet again that if it did not cooperate and did not fulfill its new commitments, tough sanctions (such as escalating limits on Iranian banks abroad or restricting the export of refined oil to Iran) would be instituted. These types of steps would seriously weaken the Iranian economy and would threaten Mahmoud Ahmadinejad's administration at a time when it is already under attack from those of its citizens who believe the Iranian president was not actually elected.

The critics are arguing that Iran cannot be trusted, and Obama agrees. Indeed, he is talking about the kinds of sanctions conservatives have advocated for years. Many of the critics simply want a military attack, because they say we can never be sure even if Iran were to fulfill its new commitments, which they doubt, that we would know whether Iran has more hidden nuclear sites. But that argument is contradictory. If we don't know where all the sites are, how do we bomb them? Besides, most experts, including Defense Secretary Robert Gates, believe that a military attack, which Obama has not taken off the table, would not delay an Iranian nuclear force for more than three years and would come at a high cost to the United States.

Instead, Obama's actions have thrown the Iranians on the defensive, and demonstrated that he is capable of challenging them directly. Israel is quietly supporting his efforts. Only time can tell whether he will succeed, but he provides a refreshing hope for the first time that an innovative American policy has a chance of stalling the Iranian nuclear march. It is now the United States, not Iran, that is on the offensive, and it is noteworthy that the president has significant international support for his policies -- something George W. Bush found impossible to achieve.

It's the same story when we turn to Israeli-Palestinian negotiations. Bush was unable to advance the Arab-Israeli peace process during his presidency. Indeed, he made matters worse when, against Israeli and Palestinian advice, he insisted on the Palestinian election in January 2006, which resulted in a Hamas victory.

Obama immediately began to make clear that his administration would actively support Arab-Israeli peace when he announced on his first full day in office that former Sen. George Mitchell would be his Mideast envoy. The Obama team tried over the last eight months to get Israel to freeze settlements, and the Palestinians to enhance security and lessen incitement against Israel. For the first time, an American president demanded that the Arab states take confidence-building measures in response to Israel's concessions without waiting for final treaties to be signed. As Obama admitted when he met with Israeli Prime Minister Benjamin Netanyahu and Palestinian Authority President Mahmoud Abbas, not all of these steps were taken, but there was progress on each of the issues nonetheless.

Freezing settlement construction does not impede Israeli security. The president was not calling for dismantling any settlements. He was only looking for an Israeli confidence-building measure, and, of course, settlement construction can be unfrozen if talks go poorly. At this time, when it is so critical to gain the involvement of Arab regimes in the confrontation with Iran, positive steps from Israel can enhance the atmosphere for cooperation against Tehran's interests and actions.

In any case, at the U.N. General Assembly, on the two key issues, Obama stood with Israel. He supported Netanyahu's idea of relaunching negotiations 'without preconditions,' and, even more important, he endorsed the idea of Israel as a 'Jewish state,' the Israeli prime minister's top priority in negotiations. Think about it: If Israel will be recognized as a Jewish state, the idea of settling massive numbers of Palestinian refugees in pre-1967 Israel is simply closed.

It is little wonder, then, that it was Netanyahu, not Abbas, who left satisfied with what had happened in New York. The Obama team's tough stand in pressuring the Palestinians into delaying for six months the U.N. Human Rights Council adoption of the dangerous Goldstone report is another indication of how close American and Israeli policy really is. From the Arab perspective, here was a president who held out a stronger extended hand than his recent predecessors, but who took just as sturdy a stand behind Israel as any of them, while demanding stronger concessions from Arab states during negotiations than any president in American history.

The facts speak for themselves. Anyone concerned with Israel's survival as a Jewish state should stop criticizing Obama's policies.

Steven L. Spiegel is a professor of political science and director of the Center for Middle East Development at UCLA and national scholar at Israel Policy Forum.

This column is cross-posted from Los Angeles Jewish Journal.

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Cenk Uygur: How Alan Grayson and Michael Moore Changed the Conversation

Cenk Uygur: How Alan Grayson and Michael Moore Changed the Conversation: "

It's not the answer that matters, it's the question. So when Alan Grayson suggested that the Republican's health care plan was for people to die quickly, he began a conversation that the Democratic Party couldn't lose and the Republicans couldn't win. Because then the question being debated was: Do Republicans want people to die quickly?

For the whole summer, the Republicans had managed to shift the debate from 'should we reform the health care system in this country?' to 'is the Democratic plan to reform health care a government takeover?' So, instead of the onus being on the health care industry and their Republican lovers to prove that we should maintain the status quo, the onus shifted to Democrats to prove that their plan was perfect.

This is an old trick of lobbyists (really well demonstrated in Thank You For Smoking). You change the conversation to a battle you can win. So, Rep. Grayson used their methods against them. And now the conversation we're having is whether the health care system is acceptable or if it leads to killing people for profit. Mission accomplished.

Michael Moore is doing the same in his move Capitalism. First, he is changing the conversation on who caused the financial collapse in the first place. Most people are acutely aware that it was the bankers, but not the Fox News audience. So, when he went on Sean Hannity's show the other night, he introduced that idea to them and then Hannity was stuck in the position of defending the bankers and blatantly blaming the victims and the poor. Instead of discussing how government was at fault, Moore started a conversation on how deregulation might have led to this mess.

But more importantly, he started a battle for the heart and soul of Christianity. He proposed in the movie and in his debate with Hannity that being on the side of the rapacious rich is un-Christian. He claimed his position is the more Christian position. For so long, the Republicans have simply claimed that they are more Christian without anything to back them up. They just shouted louder. Now, Moore is shouting just as loud.

By putting them on the defensive on how they are not good Christians if they help the rich crush the poor, he has once again changed the conversation. Are the Republicans bad Christians? It doesn't matter what the answer is, that's a question you can't lose with.

What the conservative movement has understood for a long time is sometimes it takes something a little inflammatory to change the conversation. You have to draw attention to you, so people can start discussing the topic you want.

This was perfectly demonstrated by the wild and angry town hall crowds. They were sometimes saying hideous things about Obama but they succeeded in shifting the burden of proof on to the Democrats. Now, it looks like we have a couple of guys that know how to play this game. And they have succeeded in shifting the focus back to where it should be. It's refreshing to have people who know what they're doing on your side.

Watch The Young Turks Here

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