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In an effort to reap higher profits, to beat the next guy, money managers pay big sums for nonpublic investing information. The result for some of them has been to have their offices raided by the FBI on the assumption they’re allegedly taking part in insider trading.
But the money managers see it differently. To them, it’s the simple use of “mosaic theory.” This is the idea that they piece together bits of non-material information—meaning it’s too small to move a stock—to form a whole picture that they can then use to generate an investment strategy. And they think this gives them an edge on the competition.
Now, whether or not this constitutes insider information is irrelevant to Cramer. This week he put the whole idea of so-called inside information in the “Sell Block.” Because in the end, investors don’t need this kind of info at all. There’s plenty of public information available to all investors that’s dependable enough to make them money.
Cramer always looks at industry analysis, then reads up on public statements from the companies and their competitors, as well as their suppliers and distributors. And he looks at Securities and Exchange Commission filings, company presentations and, most importantly, the quarterly conference calls.
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