Insiders are becoming increasingly bullish….Now, I don’t usually buy into the insider buying/selling data (I’ve done quite a bit of research here leading to pretty inconclusive results), but I really like Mark Hulbert’s work and generally enjoy the insights he provides. According to his data, insiders are the most bullish they’ve been in quite some time:
“The stock market is likely to be higher at year’s end.
That, at least, is the conclusion I draw from the recent behavior of corporate insiders, who are behaving in ways that suggest the correction’s bottom is at hand.
Consider the latest insider data, courtesy of the Vickers Weekly Insider Report, published by Argus Research. The indicator that they calculate on which I place particular attention is a ratio of all shares that insiders have recently sold in the open market to the number that they have purchased.
For the week that ended last Friday, this sell-to-buy ratio stood at 1.58 to 1, which is less than half the average level over the last decade of 3.4 to 1.
At the bull-market high earlier this fall, in contrast, the insiders’ sell-to-buy ratio got as high as 6.86 to 1.
In other words, at least when measured according to this indicator, the insiders are more than four times more optimistic about their companies’ shares now than two months ago. This much insider enthusiasm is a good sign.”
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.