Barron’s – Insider Buying’s Positive Message

Author: , Post Date: August 27, 2020
image_pdfimage_print

Excerpt from Barron’s commentary compendium.

Aug. 28, 2020 – This commentary was issued recently by money managers, research firms, and market newsletter writers and has been edited by Barron’s.

In the U.S. equity market, a popular insider-trading gauge is the Insider Buy/Sell ratio, which is the aggregate insider purchase over insider sale. Normally, the ratio stays at 0.4 to 0.5, indicating roughly twice as much insider sale volume as purchase. This is understandable, given that many insiders receive stock compensation. There have been only 11 months when the ratio reached above one since 2004, meaning there are more insiders buying than selling their stocks. Interestingly, each insider-purchase spike coincided with a market drop. While the highest reading on the ratio came from the financial crisis in November 2008, the second-highest reading was in March this year. Both can be viewed as the entry signal of the decade.

Digging further into the insider-buying frenzies, we find that the stock market post-performance once the Insider Buy/Sell ratio jumps above one is phenomenal. The U.S. equity market increases about 25% in one year and 54% in three years. Next time someone doesn’t believe in market timing, maybe we should point them to the corporate insiders. —Leo Chen



Full article at Barron’s (paywall): https://www.barrons.com/articles/apples-bet-on-a-cashless-future-could-pay-big-dividends-for-investors-analyst-says-51598657910


Links to other websites or electronic media controlled or offered by Third-Parties (non-affiliates of Cumberland Advisors) are provided only as a reference and courtesy to our users. Cumberland Advisors has no control over such websites, does not recommend or endorse any opinions, ideas, products, information, or content of such sites, and makes no warranties as to the accuracy, completeness, reliability or suitability of their content. Cumberland Advisors hereby disclaims liability for any information, materials, products or services posted or offered at any of the Third-Party websites. The Third-Party may have a privacy and/or security policy different from that of Cumberland Advisors. Therefore, please refer to the specific privacy and security policies of the Third-Party when accessing their websites.

Sign up for our FREE Cumberland Market Commentaries Cumberland Advisors Market Commentaries offer insights and analysis on upcoming, important economic issues that potentially impact global financial markets. Our team shares their thinking on global economic developments, market news and other factors that often influence investment opportunities and strategies.

cumber map
Cumberland Advisors® is registered with the SEC under the Investment Advisers Act of 1940. All information contained herein is for informational purposes only and does not constitute a solicitation or offer to sell securities or investment advisory services. Such an offer can only be made in the states where Cumberland Advisors is either registered or is a Notice Filer or where an exemption from such registration or filing is available. New accounts will not be accepted unless and until all local regulations have been satisfied. This presentation does not purport to be a complete description of our performance or investment services. Please feel free to forward our commentaries (with proper attribution) to others who may be interested. It is not our intention to state or imply in any manner that past results and profitability is an indication of future performance. All material presented is compiled from sources believed to be reliable. However, accuracy cannot be guaranteed.
Loading...