Message Font: Serif | Sans-Serif
No. of Recommendations: 3

I have never paid too much interest in insider selling for the simple reason that an employee can have a multitude of reasons for off loading their stock which have nothing to do with the fundamentals of the company involved (new house, new car, diversifying into other stocks etc etc). I believe that insider buying is more indicative of a company's prospects.

with regard to the stated association between the sell:buy ratio in 2011 and the subsequent correction in DJIA, it is just that - an association. The implication is that the employees of the entire NYSE listed companies had advance warning of the impending credit rating downgrading and as a result logically and unemotionally reduced their stock positions accordingly. I'm not sure if I buy this. Associations are fraught with peril - over the last 20 years there has been an exponential rise in obesity in the western world. At the same time there has been an exponential rise in the use of mobile phones. Does this mean that mobile phone use causes obesity?

The short answer, in my opinion, is tha there is no way of knowing when there is going to be a market correction, in the same way that it is impossible to know for sure how long lasting and deep that correction will be. After the event it is the easiest thing in the world to find a series of indicators that pointed to a correction taking place - often their validity in real time is less impressive.

That being said, I think there are some advantages in slowly accumulating position as you suggested. I think this is especially true when the stock has recently taken a hit (you never know how far down a stock is going to go) - Apple is probably a good example of this (as was NFLX). The downside of course is that the stock may contine to rise during this period and you may ultimately end up paying a higher price than if you had just bought the full allocation at the bet-go

You pay your money and you take your chances....


P.s don't forget that The Pro portfolio has hedging positions to help offset a market reversal. I think the catch-up on this is coming soon but was also described in the last Pro recruitment drive. I would highly recommend that you consider these.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.