Kinabalu

How Some of the Smartest Investors Turned Dumb in 2008

Someone has to be in the right tail of the market return probability distribution and someone has to be in the left tail. I've never been very sure that being smart/dumb, as opposed to being lucky/unlucky, had more to do with it.

In Sam Zell's case he was definitely smart to have hedged his bet by limiting the commitment of his own funds.

Is the SEC 'Rumorgate' Push a Waste of Time?

"I can’t imagine how the SEC will be able to prove that an individual knowingly spread a false rumor"

Your imagination capability needs some work. As pointed out by 219640, your second example would in fact be quite easy to prove. The problems arise because of the difference between "fact statements" and "value statements". Someone trying to start a rumor will normally use fact statements because they carry more weight. For example, "I heard the CEO of Company X and the CEO of Company Y talking in a coffee shop about merging" carries more weight than "I think Company X and Company Y might merge". A fact statement is, by definition, provable.

The SEC will probably confine its investigation in the beginning to the major investment banks and hedge funds but if they expand it to cover internet sites they can find plenty of violations. Right here on Seeking Alpha there are contributors that regularly make false statements of fact to encourage short positions in stocks.

You didn't mention it in your article but the SEC's investigations will also look at naked shorts. this will also be easy to prove. In fact there was an article on Seeking Alpha quite recently where the author, in the eighth comment after the article, bragged about having naked shorts.

seekingalpha.com/artic...