Insider Trading: Look Who's Buying on Wall Street
As individual investors have learned this week, trying to predict the direction of the stock market is a fool’s game. The supposed “indicators” that analysts use to pepper their prognostications are often scarcely more accurate than tea leaves, and the idea that Wall Street pros know which way the market will trend in the short-term is a myth right up there with the Easter Bunny, the Tooth Fairy, and the ability of leprechauns to locate gold.
But there is one group of major league investors who like the way the market looks and have been pouring millions into stocks. Who are these equity optimists? CEOs and other corporate insiders, and they’re buying up stocks in their own companies by the bushel.
The data comes from the Wall Street analytical firm Insider Trade Reports , which specializes in tracking insider trading volume. ITR has noticed a big uptick in corporate insider trading this week, especially on the “buy side” of the market. ”Insider buying continued to remain very strong for a third day in a row with insiders picking up more than $65 million worth of stock in a single day,” the firm said in a statement Tuesday.
( MORE: Is the Economy Worse Off Than in 2008? )
ITR evangelizes the notion that even regular investors can make big money following the trading patterns of CEO’s and other big executives. The company says on its site:
I haven’t read the literature, so I’m not going to fully endorse that statement or suggest that anyone ought to adopt the investing strategy it implies. (It’s not even clear to me how an individual investor might “follow in the footsteps of company insiders.”)
But in the midst of an awful lot of stock market gloom and doom, it does seem worth noting that the people who are most intimately familiar with the performance and prospects of certain companies are enthusiastically bullish.
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often scarcely more accurate than tea leaves, and the idea that Wall Street pros know which way the market will trend in the short-term is a myth right up there with the Easter Bunny, the Tooth Fairy, and the ability of leprechauns to locate gold.
Counting on huge demand at a time when the housing industry here is at a snail's pace and China is raising rates to slow their economy is poor judgment at best, and akin to believing in the tooth fairy and Easter bunny at worst.
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In other news, the Tooth Fairy and the Easter Bunny met at the Romney headquarters Tuesday to discuss their plans for a joint summit with Humpty Dumpty. Fortunately or unfortunately depending on one's perspective, it will be easy: Romney is a Mormon.
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