Outsider trading
When it comes to investing in individual stocks, insiders have a big advantage over the rest of us, said Jason Zweig in The Wall Street Journal. CEOs can—and often do—intentionally “knock down” their stock’s price so they can issue executives’ stock options at a lower price and be “in the black” after the stock bounces back. Now investors who know the exact dates that grants are issued could reap some of those benefits, too. A study in the Financial Analysts Journal found that “investors can beat the market by about two percentage points a year, after trading costs,” if they short a stock about 20 days before a company’s annual options grant and then buy the stock “on or about the award date.” Of course, such research could “unleash a flood of trades” like this—maybe that would finally force executives to think twice about this unsavory practice.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
When credit trumps debit
In the past decade, the number of debit card transactions has doubled, while credit transactions have shrunk by nearly half, said Ismat Sarah Mangla in Money. Paying with ready funds might seem prudent, but if you’re buying a big-ticket item, reach for your credit card instead. If you run into problems, credit card issuers “will battle with the merchants on your behalf” and remove the charge until the dispute is settled. Use your debit card, and it’s up to you to work it out with the retailer—and carry the cost in the meantime. What’s more, many credit cards will automatically extend the manufacturer’s warranty. Just be sure you pay off your credit card balance promptly, or you’ll pay dearly for that extra protection.
