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Pay attention to insiders
When managing your stock portfolio, you would do well to imitate the behavior of corporate insiders.
No, I don't mean that you should start cooking your books to make your performance look better than it really is. I am instead suggesting that you pay attention when corporate insiders, with their own money, purchase shares of their companies' stock in the open market.
A number of investment newsletters over the years have based their strategies on the behavior of insiders, and almost all of them have beaten the market.
And based on recently released data showing insiders buying in much greater numbers than in previous months, these newsletters are turning bullish on the stock market.
Before reporting current insider data, it is important to bear in mind that these newsletter editors consider an insider purchase to be more meaningful than an insider sale. This is because an insider may sell shares of his company for any of a number of reasons having nothing to do with his opinion about future prospects for its stock.
But when he purchases shares of his company's stock, it can be for no other reason than confidence that those shares are undervalued.
This asymmetry between insider sales and purchases is reflected in their historical ratio: Over the long run, insiders sell about twice as many shares as they purchase. According to Vickers Weekly Insider Report, therefore, an insider sell-buy ratio well below 2 is bullish, since it signifies that insiders are buying at an above-average rate.
What do the recent insider data tell us? Since the beginning of June, according to Vickers, the sell-buy ratio is 1.52 to 1. Insiders have been even more biased towards the buy side since June 21, furthermore, with a sell-buy ratio of 1.16.
These readings represent a dramatic shift from earlier this year, when the sell-buy ratio rose to above 4 to 1. "In light of recent insider data," Vickers concludes, "the worst is over and investors should begin focusing once again on the longer-term market outlook."
The other insider newsletter tracked by the Hulbert Financial Digest, Jack Adamo's Insiders Plus, also has turned more bullish. Earlier this week, Adamo wrote to his subscribers: "You know how cautious and pessimistic I have been about the market for the last year... But I'm now seeing stocks I want to buy."
The Hulbert Financial Digest has been tracking the Vickers service since the beginning of 1993. Through this past June 30, according to the Hulbert Financial Digest, its two model portfolios have produced a 12.8 percent annualized return, versus 10.5 percent for the Wilshire 5000 total return index.
The Hulbert Financial Digest has less data for Adamo's newsletter, since it is only a couple of years old. Over the past year and a half, however, according to the Hulbert Financial Digest, it has produced a 2.3 percent annualized return, in contrast to -17.9 percent annualized for the Wilshire 5000.
(Quelle: cbs.marketwatch.com)
So long,
Calexa
www.carstenlexa.de
Pay attention to insiders
When managing your stock portfolio, you would do well to imitate the behavior of corporate insiders.
No, I don't mean that you should start cooking your books to make your performance look better than it really is. I am instead suggesting that you pay attention when corporate insiders, with their own money, purchase shares of their companies' stock in the open market.
A number of investment newsletters over the years have based their strategies on the behavior of insiders, and almost all of them have beaten the market.
And based on recently released data showing insiders buying in much greater numbers than in previous months, these newsletters are turning bullish on the stock market.
Before reporting current insider data, it is important to bear in mind that these newsletter editors consider an insider purchase to be more meaningful than an insider sale. This is because an insider may sell shares of his company for any of a number of reasons having nothing to do with his opinion about future prospects for its stock.
But when he purchases shares of his company's stock, it can be for no other reason than confidence that those shares are undervalued.
This asymmetry between insider sales and purchases is reflected in their historical ratio: Over the long run, insiders sell about twice as many shares as they purchase. According to Vickers Weekly Insider Report, therefore, an insider sell-buy ratio well below 2 is bullish, since it signifies that insiders are buying at an above-average rate.
What do the recent insider data tell us? Since the beginning of June, according to Vickers, the sell-buy ratio is 1.52 to 1. Insiders have been even more biased towards the buy side since June 21, furthermore, with a sell-buy ratio of 1.16.
These readings represent a dramatic shift from earlier this year, when the sell-buy ratio rose to above 4 to 1. "In light of recent insider data," Vickers concludes, "the worst is over and investors should begin focusing once again on the longer-term market outlook."
The other insider newsletter tracked by the Hulbert Financial Digest, Jack Adamo's Insiders Plus, also has turned more bullish. Earlier this week, Adamo wrote to his subscribers: "You know how cautious and pessimistic I have been about the market for the last year... But I'm now seeing stocks I want to buy."
The Hulbert Financial Digest has been tracking the Vickers service since the beginning of 1993. Through this past June 30, according to the Hulbert Financial Digest, its two model portfolios have produced a 12.8 percent annualized return, versus 10.5 percent for the Wilshire 5000 total return index.
The Hulbert Financial Digest has less data for Adamo's newsletter, since it is only a couple of years old. Over the past year and a half, however, according to the Hulbert Financial Digest, it has produced a 2.3 percent annualized return, in contrast to -17.9 percent annualized for the Wilshire 5000.
(Quelle: cbs.marketwatch.com)
So long,
Calexa
www.carstenlexa.de
