Summary: Does insider buying or selling mean anything?Unlike most of us, corporate insiders need to tell the SEC when they buy or sell their company’s stock. There are armies of analysts who examine these filings for clues as to whether this is a good time to buy or sell the market. In theory, insiders should have better information than the rest of us. In practice? Not so much.Consider the following:In 1991 insider selling spiked as the stock market roared out of the 1990 recession. Insiders had held their sales back for several years. We know what the market did after these sales;In 1999 insider buying hit an 8-year high, as corporate executives became enamored of their own shares;Again, in August 2007 insider buying set a new record; Now the wires are filled with stories of insider selling, just as they were in 2009, 2010, 2011, and 2012. At some point, they’re bound to be right. But a stopped clock isn’t useful, even if it’s accurate twice-a-day.While CEOs and CFOs may have a good handle on their company’s fundamentals, they often don’t have a clue what constitutes a fair valuation. And they may need to sell shares for all kinds of other reasons—tuition, home-buying, taxes—that have nothing to do with the business.Trading in inside information is illegal. And trading on insider’s actions can be downright foolish. Douglas R. Tengdin, CFA Chief Investment Officer Hit reply if you have any questions—I read them all!Follow me on Twitter @GlobalMarketUpd
