Sign in
Become a MarketWatch member today
Portfolio Insights by Brett Arends Archives | Email alerts
Sept. 21, 2011, 6:01 a.m. EDT
By Brett Arends, MarketWatch
BOSTON (MarketWatch) "” Something ominous is happening on Wall Street, but nobody has noticed.
The insiders have vanished.
Chief executives. Board members.
The head honchos. The people who know.
Just a few weeks ago, they were out in force, buying up shares in their own companies with both hands.
No longer. They've disappeared. Almost overnight.
"They've stopped buying," says Charles Biderman, the chief executive of stock market research firm TrimTabs, which tracks the data. "Insiders aren't buying this rally."
Insider stock purchases, which surged above $100 million a day in the market slump last month, have now collapsed to just $13 million a day.
Meanwhile the ratio of insider sales to purchases has skyrocketed. Today insiders are dumping $7 in stock for each $1 that (other) insiders are buying. That's a worrying ratio. Six weeks ago the amounts of purchases and sales were about equal.
It's the kind of news that should give investors pause.
What insiders do with their own money is one of the stock market's best barometers.
After all, who better than company executives know their own order books? Who knows the conditions in their industry better?
You find insiders typically buying heavily at the market lows "” they did in 1987, in 1998, and they did during the financial crisis in 2008-9.
(You also typically find them cashing out big-time at the peak).
Brett Arends is an award-winning financial columnist with many years experience writing about markets, economics and personal finance in Europe and the U.S... Expand
Brett Arends is an award-winning financial columnist with many years experience writing about markets, economics and personal finance in Europe and the U.S. He has received an individual award from the Society of American Business Editors and Writers for his financial writing, and was part of the Boston Herald team that won two others. He was educated at Cambridge and Oxford Universities, and has worked as an analyst at McKinsey & Co. He is a Chartered Financial Consultant (ChFC) and Accredited Asset Management Specialist (AAMS). His latest book, "Storm Proof Your Money," has just been published by John Wiley & Co. Collapse
Life Savings
Grantham: "?No market for young men'
Rex On Techs
Apple's silence on iPod speaks volumes
Ways and Means
Long-term care plans: Most still don't buy in
London Eye
Africa: the final frontier for growth investors
Portfolio Insights by Brett Arends
Why the insiders have quit buying stocks
Writing on the Wall
Short the euro and make a buck
Al's Emporium
Offensive non-apology by Netflix CEO
On Retirement
Obama's debt plan may hit your retirement
On the Markets
Is gold forming a bubble?
Buyer Beware
4 secret rights savvy air travelers know
Read Full Article »