The reliance on insider transaction data to make buying or selling decisions of a specific stock one owns ought to be cautioned. As with other tools such as fundamental analysis, technical analysis and seasonality, a number of factors ought to go into every investment or divestment decision.
Speculating on a given stock solely on the basis of whether or not a CEO or director bought or sold a big chunk of stock could be costly.
In addition to discussing such insider transaction information with a financial advisor, getting a full picture of the health of a given company should be priority number one for investors, and I would specifically recommend fundamental analysis as the primary metric to be used in deciding whether a stock fits one’s risk profile and investment goals.
As always, please remember to consult with a certified financial advisor into your own homework before making investing decisions. Insider buying and selling activity is not necessarily indicative of the future performance of a given company’s stock price, and insiders regularly buy or sell positions in companies they own or manage for reasons other than expectations of future stock price performance.
Analyzing insider transactions in a given stock is one tool of many to gain pertinent information to assist in investment decision making.
Invest wisely, my friends.
