Here we are refering to overall market behavior as a whole. In individual stocks, when insider sell individually, it may mean they are rechannelling their funds, but usually when key insiders sell, there may be something wrong.
What if we see a headline showing that in general?
Barry Ritholtz has an article out showing that using these headlines as your market timing tools may not be highly accurate always:
• In late 1982, as the DJIA approached 1050 –a level that had proven a barrier for 17 years– Insider Selling reached its highest (supposedly most bearish) extreme in almost a decade.
• Ironically, by the summer of 1987 corporate insiders had turned into aggressive buyers of their own stock. In fact, Insider Buying reached a record (supposedly
most bullish) level in October 1987… just one week before the 1987 Crash.
• In 1991 Insider Selling spiked as the stock market roared out of the 1990 recession and corporate earnings languished. Everyone was convinced that stocks had disconnected from reality and the insiders were right. Wrong again!That was only the first year
of a 9-year bull market run that would produce the longest period without a 10% correction.
The Big Picture | Is insider selling a concern? | Read here
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
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Matt
Thursday 14th of March 2013
Got a qn abt your dividend stock tracker, specifically on Sembcorp's FCF. How did you calculate their FCF to arrive at those figures?
Kyith
Saturday 16th of March 2013
hi Matt i believe it is Operating cash flow - maintenance capex. is something wrong with it? do note that perhaps the minority share holdings of sembmarine may distort it.