Insiders are Betting on a Bull Market

Here's what really bugs me lately about the stock market and the economy in general: every day you read that 'market tanks on fears of recession' or something of that ilk. Why don't we all just go ahead and say we're in a recession?!? If we just go ahead and say it, we can stop 'fearing' it and get on with the business of turning it around. Headlines like that and the fact that the market is reacting to fears of something that we all know is here really bugs me. OK - enough on that.

I read an interesting article yesterday over at MarketWatch talking about corporate insider trading. If you don't know, insiders are typically high ranking employees at public companies that have stock options or own large numbers of shares. When a corporate insider makes a trade, they are required to report it to the SEC. You can even go over to Yahoo Financials and view the insider trades (warning - it's depressing knowing that some guy three or four spots above you on the corporate ladder just exercised $10 million in stock options). The point of the article was that corporate insiders are actually buying MORE of their company shares these days. That's a very rare occurance - typically they're cashing out over a period of time.

So - what does this tell us? To me (and to the author) it indicates that corporate insiders who, theoretically, should know the most about their own companies and their business outlook are buying shares because they think that the market is at a low point. Why would you buy shares in this type of shaky market if you didn't think that better days (higher stock prices) were coming? Hopefully Wall Street will take notice of this phenomenon and we'll get some better headlines in the not too distant future so the market can over react to them in the other direction!