Summary of Information-motivated trading

1. Information-motivated traders (example: bank treasury) trade to profit from information that
they believe allows them to predict future prices.
2. They hope to buy low and sell high, with an additional return from their information.
3. Active investment managers (example: pension fund) are information-motivated traders who
collect and analyze information to identify under/overvalued assets.
4. They aim to obtain a higher return than the unconditional return by using their information
analysis.
5. The distinction between information-motivated traders and pure investors lies in their motives
for trading.
6. Investors trade to move wealth forward in time, while information-motivated traders trade to
profit from superior information.
7. Information-motivated traders trade because they expect prices to change faster than others
would expect.
8. They hope to close positions and realize profits quickly.
9. Investors can also be information-motivated traders if they collect and analyze information to
get greater returns.
10. A consistent failure to produce superior returns means the efforts are futile and the trader
would have been better off buying and holding a diversified portfolio.