Insider Trading Returns

By:  Brad Grounds After reading this article, you, as a retail investor, will have all the knowledge necessary to reliably and accurately call the absolute bottom of any major market decline, and, if you stay disciplined in keeping cash on the sideline waiting for such a bottom to occur (…and this wait can take years…) then you can earn substantial profits from doing so. Sounds impossible, doesn’t it? If you’ve read the sentence above and are scoffing at the idea that someone could teach you to call market bottoms, I don’t blame you. After all, there is no analyst in the world – not even Warren Buffett himself – who has been able to do so. But I invite you to read this article in full and, upon completion, reconsider whether you now believe what I wrote above. I hope you enjoy! The Key Metric to Watch: Are  Insiders Buying Abnormal Amounts of Their Own Stock in the Open Market? Among all of the potential indicators that could signal a buying opportunity likely to result in substantial

By: Brad Grounds As I write this post today, the S&P 500 is trading in the 3,600s.  The S&P 500 has declined by 25% (and the NASDAQ is down even more), and many "talking heads" and other pundits are calling for a recession.   With this in mind, I thought it would be a good idea to check with people who actually know what they're talking about - the top executives at all publicly traded companies on US exchanges.   I have previously discussed in detail about the remarkably strong evidence that the collective intelligence of market insiders is able to identify market bottoms with incredible accuracy .   Hence, I will skip any background explanation of either my method or the historical accuracy and support for the metrics that I cite below. Market Insiders Have Already Given A Buy Signal (though it is weak) As I sit here today on June 17, 2022, I cannot comment directly on the feelings of market insiders (i.e., the top executives actually running all of the publicly

By:  Brad Grounds The question we are trying to answer today is this: Does the size of a corporate insider's trade relative to the size of his or her past trades in the same company's stock correlate with the return achieved by such trade?  Put another way, do abnormally large purchases by insiders earn, on average, higher returns than smaller purchases by the same insider?     What Constitutes A Large Trade? A number of academic studies suggest that larger purchases do correlate with larger returns.  However, it is important to note how each study defines large trades.  Below are the two common ways that the line of demarcation between "large" and "small" trades have been defined in a number of different studies, as well as the potential shortcomings of such approaches. Total number of shares purchased - Using this method, the total number of shares purchased serve as the proxy to segment trades into groups.  Trades with a very high number of shares - perh