Massive Insider Trading Spurs Market Concerns

Discussion in 'Stock Market Forum' started by Rainman, Dec 11, 2015.

  1. Rainman

    Rainman Senior Investor

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    Even though many investors would like to believe that the worst is over because the market appears to be somewhat stable as Corporate insiders sell their shares "at near record levels" the [investors] have good reasons to be concerned.

    http://www.cnbc.com/2015/12/09/massive-insider-selling-spurs-stock-market-concerns.html
    Should this concern all investors? Corporate insiders could know that stock prices are about to fall?
     
  2. baudwalk

    baudwalk Senior Investor

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  3. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Insider buying or selling of any one particular stock is one of many things I look at when deciding whether or not to buy/sell/short that particular stock. The fact that "they're not selling more than they are" overall may mean that on the whole they aren't overly pessimistic in the near term.
     
  4. petesede

    petesede Guest

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    it is difficult to look at a single company and a single insider and draw any conclusions. It could be something to do with their personal life, or simply they are diversifying their net worth. Is it really wise to have your investments and your income locked up in the same company.

    that said, it is a psychological thing. Even though i don´t think an insider selling is necessarily a horrible thing, I know many people do watch it, so therefore it is something to worry about, only because of them selling.
     
  5. Lynk

    Lynk Member

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    I don't know how you can know about this in advance? I think the only way to avoid this kind of trouble is to make sure to spread your investments across different companies. Any other ways for an individual to protect themselves?
     
  6. petesede

    petesede Guest

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    Nothing. Insiders have very strict guidelines on how and when they can sell. It is just like everything else, there is good and there is bad. Some people like companies that have a lot of insider holdings because it shows they have confidence in their company. But that also means there is a greater chance they will at some point sell. Diversify is something we all hear, but yet expect insiders to not do it? Insider selling is as likely to be a false positive test for a bad company as it is to be harmless.
     
  7. Corzhens

    Corzhens Senior Investor

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    It may be due to the year-end because some companies trade their stocks to give their books a good look. I cannot really say if the prices are low because on normal days the price fluctuates but now they are stable. As long as the stock is blue chip probably it is not scary to buy... that is if you intend to stock up before the new year otherwise you may sell your stocks as well.
     
  8. anders

    anders Well-Known Member

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    Precisely. A lot of people get overly moralistic re: insider trading, but it's always happened and it always will. But the best approach is to use it as a metric of the stock's value and go from there. In fact, as an indicator of a companies financial health, it may very well be the best metric there is.
     
  9. turt

    turt Guest

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    Everyone agrees that the market will likely not move much or remain flat next year. Since many insiders get more stock every year, they may be pulling some out now for other uses.
     

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