{"id":36932,"date":"2013-03-19T01:38:18","date_gmt":"2013-03-19T05:38:18","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=36932"},"modified":"2013-03-19T01:38:18","modified_gmt":"2013-03-19T05:38:18","slug":"the-shocking-truth-about-insider-selling","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/03\/19\/the-shocking-truth-about-insider-selling\/","title":{"rendered":"The Shocking Truth About Insider Selling"},"content":{"rendered":"

By WallStreetDaily.com<\/u><\/a> <\/p>\n

Riddle me this, Batman\u2026<\/p>\n

In the last week, the Dow hit an all-time high. Yet corporate insiders are selling shares of their own stock at the fastest pace in over a decade.<\/p>\n

As of late February, the ratio of the number of shares that insiders sell in a given week to the number they buy almost hit 10 to 1, according to Vickers Weekly Insider Report<\/i>.<\/p>\n

That must be a sign that a turn in the market is imminent, right? Or, at the very least, that company executives don\u2019t feel optimistic about the economic outlook.<\/p>\n

After all, corporate insiders always know best.<\/p>\n

Or do they?<\/p>\n

Since Tuesday is as good a day as any to bust a Wall Street myth wide open, let\u2019s put this one to the test.<\/p>\n

Newsflash: Insiders Don\u2019t Possess Superhuman Investing Skills<\/b><\/p>\n

The rationale for following an insider\u2019s lead couldn\u2019t be more straightforward: No one knows a company better than a corporate insider.<\/p>\n

So, if insiders are buying, then they must be optimistic about the company\u2019s outlook. And if they\u2019re selling, well\u2026 not so much.<\/p>\n

Unfortunately, though, the data doesn\u2019t back up such simple logic\u2026<\/p>\n

As Jim Stack of Investech demonstrates with his annotated chart of the Dow, insider selling has been a terrible indicator of when this bull market is going to end.<\/p>\n

More specifically, since 2009, every time insider selling ramps up, the mainstream financial headlines predictably urge caution. But the stock market ends up charging higher and higher.<\/p>\n

\"Don't<\/p>\n

Insiders: The Most Unreliable Stock Market Indicator?<\/b><\/p>\n

<\/a>Lest you think the chart above is some rare anomaly related to the current bull market \u2013 and that insiders are otherwise capable of predicting market turns \u2013 consider a more comprehensive history of insider buying and selling, courtesy of Stack\u2026<\/p>\n