For beginner investors....

A friend of mine asked me a couple of general questions about investments. I felt my answer to those questions would be of interest to any beginner investor.   

First Question – Can small investors make money when there are insiders who may know this information way before it is released?

If you ask, “Can we even exploit investment opportunities?” my answer is, "I believe so”. Traders with insider information have chances of earning abnormally high profit margins. We can think that they are playing in a monopoly market. Whereas, any other investor may not have the ability to earn such high profit margins. However, every investor can invest intelligently and grab a good profit margin. Definitely, intelligent investors have the luxury to survive in the market and also grab good profits. 

Question 2 - Is it easy to make these bets?

I am going to try to answer this question based on my previous blog post, “Friendly takeovers as a Short term investment opportunity”. If you have not already read the blog, I would suggest you to read the blog.    

Trying to answer question 2, the ease of making these bets is directly proportional to your business savviness. If you know that, in the past years, Softbank has recording a profit and Sprint has been recording a loss and that Softbank is planning to buy a huge stake in Sprint, It should fairly easy to make this bet.