This week I’m spending some time testing the theory from a recent paper on how insider buying and selling affects different bearish and bullish factors.
I’m finding that adding insider data to our stable of numbers-driven market strategies really boosts returns, and more importantly, it does so by avoiding potential problems.
While insider buying does magnify gains somewhat overall, where portfolio returns go into the stratosphere is using insider selling to cancel signals that would otherwise be a buy.
This helps us avoid the big mistakes and keeps the focus of the portfolio on those companies where insiders have been buying.
The results from this combination create a portfolio that’s a laser-focused rocket ship to big profits…
Last week a new paper crossed my desk that I picked up with a great deal of interest.
One of the authors of the paper is H. Nejat Seyhun. While that isn’t exactly a household name, he is a professor at the Ross Business School at the University of Michigan who is well known among us academic finance geeks.
He is the author of Intelligent Investing, which I consider to the bible of insider trading research as well as several other important papers on using insider buying and selling to make money in the stock market.
The good doctor and his team have identified a trend that we can add to our arsenal of numbers-based strategies to make them more powerful, and improve our returns in the stock market…