Investors who look to insider sentiment as a sign of when to buy stocks will be sorely disappointed with the latest news on insider trading: Over the past 90 days, insiders at U.S. companies have bought $670.2 million worth of stock while dumping $2.8 billion on the market. In the last 60 trading days of 2008, insider buying was down by about 16% over the previous year. That sounds bad, but it actually buys a larger chunk of a stock market that's down more than 30%. So you could actually make the case that insider buying is up!Matt Krantz reports that the reason for the less-than-enthusiastic insider buying could be driven by the weakening balance sheets of the executives themselves. While CEO compensation certainly hasn't declined along with the market, the value of executives' portfolios has tanked. "Some CEOs face tax bills on shares they received as compensation," the USA Today reports -- even though those shares may not be worth as much as they were when the taxes were calculated.
This certainly doesn't qualify as good news but I'm skeptical of insider trading as a harbinger of company performance anyway: If they really did know something you don't and traded based on it, they'd be committing a felony. If we've learned only one othing ver the past few years, it should be this: The people running Corporate America don't know much more than we do.
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Reader Comments (Page 1 of 1)
2-16-2009 @ 2:18PM
t5bat3 said...
Investors are bewildered by Obama.The top marginal rate remains the reason for stocks in decline due to the amount payed to capital gains.The CEO's of major corporations are divesting their own company's stock because Barack is leading us into bankruptcy.The way out is to kick the lobbyists out of Congress.When we can't trust the nation's leaders to do the job, then it's time to have the American people stop buying stocks that hire overseas slaves.Tariffs anyone? Larry Batek
2-16-2009 @ 2:51PM
Larry Batek said...
When the CEO won't buy stock in his/her own company,you fire the profiteer.Obama's bill is more than just spending.It's Barack spending his way into bankrupting our GDP.Welfare check over paycheck is the mean.Taxpayers the mode and children are the median.The solution stands out.Limit the government.Limit the imports.Duty-free exports.Repeal payroll taxes.Tariffs!Larry Batek
2-16-2009 @ 3:39PM
BHarrison said...
If anything, the CEOs with the "insiders" information and perspective are even more disadvantaged than the average investor. if the CEOs don't have the faith and confidence to risk investing in their own corporations, then that certainly does not evoke the confidence of the average investors to invest in those corporations, does it.
If they lack the captial to invest then one can only wonder what they did with the TENS and HUNDREDS of MILLIONS of dollars that they were paid in salaries, bonuses, and other compensations during the last eight years. (In retrospect, it was difficult to find"safe havens" to invest those large sums of money during the last eight years.)
ALL of the CEOs of failing corporations (and the Boards of Directors) should be fired for their previous mismanagement of the corporations; and they should be indicted and prosecuted if they orchestrated or oversaw the orchestration of the pyramid and Ponzi schemes, the "derivative" frauds or other frauds. That is necessary to restore the public's faith and confidence in the government's handling of the frauds that have occurred.
The corrupt corporate cultures start with the CEOs, who are enabled by the Boards of Directors. This has to be changed to accomplish effective changes in instilling INTEGRITY into corporate America. That will be difficult to accomplish with an INCOMPETENT and/or CORRUPT Congress.