There is lot of attention on backdating of options and I got couple of emails from readers blaming current market weakness on the backdating scandal and predicting dire consequences due to it.
The current market weakness is not related to it. It has to do with other issues like interest rates, inflation, valuation and so on. After a four year rally a market weakness and correction is a very normal market reaction.
In my view the backdating of options is no big deal.History of Wall Street is full of scandal after scandals. If you go back in history and see some of the other insider and management scandals, this one is a insignificant event. Ever since the market existed the insiders have always tried to game the system. The regulators have always lagged in enforcing the rules. Most of the time rules are put in place to avoid future scandals. But the nature of fraud and scandals keep changing.
The market takes care of all such irregularities over a period of time. This scandal will have impact on individual companies and managers in those companies but it is not going to affect the market for long. Any one who claims it is going to have significant impact is not well versed in history of speculation.
If you have a methodology which works and if you have a system with structural edge , you should just ignore such scandals. The gurus and pundit scream about it because that is what they get paid for. It also appeals to their blind cult followers.
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