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Insider Fading

September 19, 2016

Last month – Aug. 11 to be precise – the Dow, S&P 500 and NASDAQ all closed at record highs. That hasn’t happened since Dec. 31, 1999.

 

About three months later in early 2000, we entered a rather harmful bear market. In fact, it was one of the worst in history – perhaps you’ve heard of it, it’s called The Dotcom Crash.

 

Are we headed for a similar fate in a few months? There’s no way to tell for sure, but there are some telltale signs. For instance, even though the market is up, insiders aren’t investing in their own companies. It’s so bad, that insider buying has decreased by 44 percent since 2015.

 

It dropped to its lowest ever amount just a few months ago in July. That month in particular was heavily imbalanced in terms of insider investing. There were nearly 1,400 sellers as compared to just 316 buyers. That’s 442 percent more sellers than buyers!

 

 

 

 

 

 

 

 

 

 

 

Do these people know something we don’t?

 

Their behavior seems to indicate it’s time to get out. After all, investments in general are widely-viewed as over-valued, and with shrinking profits, it’s no wonder corporate prices are 25x earnings.

Again, there’s no way to tell for sure. But it is a telling sign when executives dump their own company’s stock.

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