The last time Mark Hulbert updated his insider trading data the market was in the process of bottoming. He said insiders were very bullish. How quickly sentiment changes in a month! His latest update shows a huge reversal in insider sentiment:
“For the week that ended last Friday, this sell-to-buy ratio for NYSE-listed shares listed stood at 6.67-to-1. That means insiders, on average, were selling nearly seven shares of their companies’ stock for every one that they were buying. One month ago, in contrast, the comparable ratio stood at 1.54-to-1.
To put the current sell-to-buy ratio into a broader perspective, consider where it stood on those occasions this year when the stock market hit a high or low of more than just minor significance.
Sell-to-buy ratio for NYSE-listed stocks Early May high, just before May-June correction 7.11-to-1 Early October high, just before October-November correction 5.13-to-1 Latest week 6.67-to-1 Average over last 20 years 3.41-to-1 Early June low 2.01-to-1 Mid-November low 1.54-to-1
As you can see from the accompanying table, the latest reading is both far above the long-term average and right in line with levels seen at the market’s intermediate tops earlier this year.”
Read more here.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.