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Finance Glossary

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Over 700 finance terms, Shmooped to perfection.

Material Information


Material information is worth something. So if you want to trade stocks and have some information that only insiders know, you have to decide whether you have material information. If you do, you can't make the trade—it would be illegal. If the information you have is not material information, you can go ahead and make the deal.


You're standing in a Manhattan elevator and you overhear the CEO's doorman say, "His chief competitor has been here every night the last 3 nights for poker. I bet they are merging. Both stocks should go up a ton." That's almost certainly not material; it's gossip. But if the CEO's wife is standing there with the doorman and nods slowly after he utters this hypothesis, then it's almost certainly material and you can't trade in either stock.